If the bulls successfully defend the 200-day moving average on several major cryptocurrencies it might offer buying opportunities for traders.
Recently, the chairman of Virgin Galactic Chamath Palihapitiya said that “everybody should probably have 1% of their assets in Bitcoin,” as it is “an uncorrelated hedge” to the excesses in the financial industry. He did not approve of the strategy to buy Bitcoin only when the equity markets are down. Instead, he said that investors should keep a long-term view on Bitcoin and consider it as “insurance”.
Fundstrat’s Tom Lee said that blockchain and crypto will disrupt the financial industry over the next twenty years. For the short-term, Lee retained his bullish stance on Bitcoin. He said:
“I think there’s even a chance that Bitcoin could end, or touch the level of, somewhere around $30,000 this year.”
Daily cryptocurrency market performance. Source: Coin360
This week has been brutal for several asset classes like equities, energy, and cryptocurrencies due to Coronavirus cases surging in various parts of the world. While the equity markets continue to plunge, several major cryptocurrencies are currently attempting to stage a turnaround.
In technical analysis, it is usually accepted that when an asset is above its 200-day moving average, it is bullish. Though the recent fall in cryptocurrencies has been sharp, the bulls are attempting to defend the 200-day MA, which is a positive sign.
Let’s analyze the charts to spot the levels which might signal a trend reversal.
The bulls are attempting to keep Bitcoin (BTC) above the 200-day simple moving average at $8,758. However, the failure to push the price above $9,000 is likely to attract another round of selling that can drag the leading cryptocurrency to the next support zone at $8,240.67-$7,856.76.
BTC USD daily chart. Source: Tradingview
The 20-day EMA has turned down and the RSI is in the negative territory, which suggests that bears have the upper hand in the short-term.
However, if the BTC/USD pair bounces off the current levels and rises back above $9,000, it will indicate demand at lower levels. If the price sustains above $9,000, a rise to $9,600 and above it to $10,500 is possible.
Therefore, we will wait for the price to rise and sustain above $9,000 before proposing a trade in it.
The bulls attempted to stage a recovery on Feb. 27, which hit a roadblock at $238.258. The failure of the bulls to sustain Ether (ETH) back above $235.70 indicates selling by the bears at higher levels.
ETH USD daily chart. Source: Tradingview
The 20-day EMA has turned down marginally and the RSI is just below the midpoint, which shows that the bears are at an advantage in the short-term. On the downside, $197.75 is likely to act as strong support.
If the bulls can push and sustain the ETH/USD pair above the 20-day EMA, it will indicate strong buying at lower levels. Such a move might offer a buying opportunity once again.
After the sharp fall on Feb. 26, the bulls attempted a pullback on Feb. 27 but they could not propel XRP above the 200-day SMA at $0.25232. The failure to rise above the 200-day SMA and the neckline of the head and shoulders (H&S) pattern is likely to attract further selling.
XRP USD daily chart. Source: Tradingview
On a break below the $0.2225-$0.21302 support zone, the decline can extend to $0.18043, which is the target objective of the H&S breakdown. With the 20-day EMA sloping down and the RSI in negative territory, the advantage is with the bears.
Our negative view will be invalidated if the XRP/USD pair reverses direction from the current levels or one of the supports and sustains above $0.28550.
Bitcoin Cash (BCH) attempted a rebound off the $306.78 levels on Feb. 27, which fizzled out at $336.80. This shows a lack of buyers at higher levels. The 20-day EMA is sloping down and the RSI is close to the oversold territory, which shows that bears are in command.
BCH USD daily chart. Source: Tradingview
Currently, the bears are again attempting to sink the BCH/USD pair below the critical support of $306.78. If successful, a fall to the 200-day SMA at $281.76 and below it to $270.15 is possible.
The first sign of recovery will be a breakout of the descending channel. Above the channel, a move to $360 is possible. We will wait for a reliable buy setup to form before turning positive.
The bulls attempted to push Bitcoin SV (BSV) back above the critical level of $236 on Feb. 27 but failed. This shows that the bears are aggressively defending the resistance levels. The downsloping 20-day EMA and the RSI close to the oversold zone suggest that bears are in command.
BSV USD daily chart. Source: Tradingview
The next support to watch on the downside is $173.66 and if this level cracks, the decline can extend to the 200-day EMA at $154.70. A turnaround might be signaled if the bulls can push the BCH/USD pair back above $236 and sustain it. Until then, we suggest traders remain on the sidelines.
Litecoin (LTC) attempted a pullback on Feb. 27 but met with stiff resistance close to the previous support turned resistance of $66.1486. This shows that the bears are aggressively defending the resistance levels.
LTC USD daily chart. Source: Tradingview
On the downside, the bulls are trying to keep the LTC/USD pair above the 200-day SMA. If successful, we might see another recovery attempt by the bulls. A break above $66.1486 will be the first indication that the downtrend might be over.
However, if the bears sink and sustain the price below $57, a fall to the next support at $50 is possible. We will wait for a new buy setup to form before proposing a trade in it.
The bulls are attempting to defend the 200-day SMA but are not able to achieve a strong rebound off it. This shows a lack of urgency among the bulls to buy at current levels. If the bears sink EOS below the 200-day SMA at $3.36, a fall to $2.4001 is possible.
EOS USD daily chart. Source: Tradingview
The downsloping 20-day EMA and the RSI close to the oversold territory suggests that bears have the upper hand.
A break above the downtrend line will be the first indication that the bulls are attempting a relief rally. The EOS/USD pair is likely to pick up momentum above $4.00. Until then, we remain neutral on the pair.
Binance Coin (BNB) has broken below the 200-day SMA. If the bears can sink the price below $17.70, a drop to $16.4288 is possible. If this level also cracks, the next stop is likely to be $14.
BNB USD daily chart. Source: Tradingview
With the 20-day EMA sloping down and the RSI close to the oversold zone, the advantage is with the bears.
Nevertheless, if the BNB/USD pair turns around from the current levels and breaks above the channel, it will be the first indication that the downtrend might be over. We will wait for a new buy setup to form before recommending a trade in it.
Tezos (XTZ) has been holding close to $2.6, which is the 50% Fibonacci retracement level of the most recent rally. This is a positive sign as it shows that investors are not panicking and closing their positions in a hurry.
XTZ USD daily chart. Source: Tradingview
If the bulls can carry the XTZ/USD pair above $3.011, we expect a rally to $3.50 and above it to the lifetime highs.
Conversely, if the bears can sink the price below the $2.5263-$2.28451360 support zone, the pair is likely to weaken and drop to $1.831. We might suggest short-term trades after the price sustains above $3.011.
Chainlink (LINK) has displaced Cardano (ADA) as the tenth cryptocurrency by market capitalization, hence, it has been included in the analysis. Though the altcoin plunged below the 20-day EMA on Feb. 25, the bulls have defended the trendline aggressively.
LINK USD daily chart. Source: Tradingview
The bounce off the trendline has again carried the price above the 20-day EMA, which is a positive sign. If the bulls can push the price above $4.15, a rally to $4.50 and above it to $4.8671 is possible.
Our bullish view will be invalidated if the price turns down from the current levels and plummets back below the 20-day EMA. Such a move will indicate a lack of buyers at higher levels. The LINK/USD pair will turn negative on a break below the trendline.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.