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Analysis: The Last Hurray in Bitcoin Before the Hangover?

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The cryptocurrency market might have experienced a classic blow-off top today, with the help of the historic rally in Bitcoin that carried it past the $10,000 (and the $11,000) level before turning sharply lower during the second half of the session.

We warned of a nearby top in recent days, and altcoins also showed signs of overheating with almost all of the majors reaching overbought territory on all time-frames. BTC has no major support levels until $8200, and a quick move to that zone would be normal after the monster rally. Further support levels are still found at $7700, $7000, and $6700, and a move towards the previous major break-out level at $5000 is still not out of the question.

BTC/USD, 4-Hour Chart Analysis

Ethereum Classic has been one of the leaders of the surge, until getting severely overbought on all time-frames yesterday. The coin already plunged back to the first major support zone at the prior high near $23, and we expect further corrective price action, given the stretched long-term picture, with major support levels at $18, $16, and $14.50.

ETC/USD, 4-Hour Chart Analysis

All of the majors got caught in the wave of selling, and the state of the market is changing very quickly, but we advise traders to wait with entering new positions even during the likely bounces in the coming days, as the overbought readings should be cleared before a durable rally. Let’s see the crucial short-term charts in detail.

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum almost reached $500 amid the early rally, but it fell significantly together with BTC and it’s already looking to test the $400 level after the initial break-down. We expect the coin to outperform Bitcoin in a correction, but the test of the $380 and $350 levels is possible before another move above the $500 mark.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin breached the prior all-time high and the $100 level as we expected before turning sharply lower together with the broader market. Although, the coin didn’t reach the extreme overbought levels of Bitcoin and some of the altcoins, but we still expect it trade in a volatile manner in the coming period. Key support levels at are found at $82.50, $75, and $64.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash spiked above $750 during the initial rally today, but the coin quickly fell back to the range of the previous days. That said, the short-term uptrend is still intact, and the currency remains one of the strongest majors regarding the long-term picture. We still advise traders and investors to wait for a deeper correction before entering new positions, with support levels at $500, $470, and near $410.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple crawled up to $0.28 in the bullish sentiment but the broad selling pressure pushed the coins sharply lower, despite the more encouraging long-term picture. The coin remains on a long-term buy signal, but volatility is expected to pick up amid the correction in the segment with further support levels found at $0.2250, near $0.20, and at $0.18.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero hit our final target for the current leg higher near $200 before falling back to the $160 level that has been in focus in the previous week. The coin remains in a short-term uptrend but the long-term picture is now severely overbought and we expect a deeper correction in the coming weeks, with support further support at $150 and $125.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO didn’t follow the other majors higher in the past few days, showing considerable relative weakness after the bounce to the $40 level, but the long-term picture remains encouraging. Strong support levels are found at $30 and $27 with primary resistance at $34, and targets at $40 and $50.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA surged past the previous all-time high at $1.1 amid the euphoric sentiment, but the coin remains extremely stretched regarding the long-term momentum, and now the short-term risk/reward ratio is also unfavorable. Investors and traders should now wait for the next deeper correction before entering new positions. Support below $1.1 is found at $1, $0.75, $0.64, and $0.56.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 321 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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2 Comments

  1. Chris G

    November 30, 2017 at 1:57 am

    thanks Mate – managed to play this cycle better than the last. Now to wait things out …

  2. Lakshmana

    November 30, 2017 at 4:45 pm

    Plus one… I’m learning a lot form you guys. Especially you, Mate. Thanks.

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Analysis

Crypto Update: Ethereum Classic on Track for a Bullish Reversal

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Ethereum Classic (ETC/USD) is among the many altcoins that suffered a massive beating this year. While the pair managed to go as high as $47.296 on January 14, 2018, it has been on a downward spiral ever since. On August 14, it registered a low of $10.10 and at that price point, Ethereum Classic has shed close to 80% of its value from this year’s high.

Just as gloom and doom articles started to circulate on the internet, Ethereum Classic came back from the dead. The market is still weak but it is gaining strength. In this article, we reveal three reasons why we believe ETC is on track for a bullish reversal.

Successful Backtest of a Breakout

Many investors believed that Ethereum Classic was headed into even deeper bear territory. It breached support of $12.00 on August 13 and generated another lower low. After all, lower highs and lower lows are the hallmarks of a downtrend. ETC seems consistent in following the textbook definition of a downtrend.

With these developments, it’s difficult to imagine that Ethereum Classic has already broken out of a reversal pattern. However, it did break out of the large falling wedge on the daily and weekly charts. What we’re seeing right now is the backtesting of the breakout.

Daily chart of ETC/USD

In technical analysis, a resistance becomes a support level once breached. The chart above shows the clear breach of the resistance, hence the breakout. Even with the breakout, Ethereum Classic still dropped. This may seem counterintuitive that’s why many are still saying that the market is bearish.

However, the chart clearly depicts that ETC bounced from the support. It is respecting the new support, which means the breakout is still valid. The backtesting was a resounding success.  

Ethereum Classic Indicators Look Strong

We’re bullish on Ethereum Classic because technical indicators are glowing. Ignore the price drop and you’ll see that the market is gaining strength.

A quick look at the weekly chart reveals that bulls are returning in massive numbers. The extreme volume surge over the last two weeks tells us that bulls are buying the market. The last time ETC printed the same volume level was back in February 2018. However, this is the first time the market is printing such heavy volume for two consecutive weeks.

Weekly chart of ETC/USD

On top of that, a long bullish divergence can be spotted on the daily MACD. Also, ETC has bounced from historic daily Stochastic support of 7.00. These indicators tell us that bulls are wrestling the momentum away from bears.

Daily chart of ETC/USD with indicators

Projected Move

ETC/USD may be looking bullish, but that doesn’t mean that the market will skyrocket anytime soon. On the contrary, it would be better for the long-term health of the market for the price to consolidate between $12 – $20 before making a major move up. If a massive rally occurs that works, too. Whatever happens, we believe that the future looks rosy for ETC.

ETC/USD may have bottomed out

The main reason for the optimism is because the market just bounced from its historic support. This tells us that a bottom may be in place and it’s highly likely that ETC will not go anywhere but up.

Bottom Line

ETC may look extremely bearish but a closer look tells us the exact opposite. The successful backtest of the breakout and the flashing of bullish signals from multiple technical indicators tell us that Ethereum Classic is on track for a bullish reversal.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 224 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

Ethereum’s Tumble:  ICOs Aren’t The Problem

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Trying to come up with a rational explanation for crypto price movements is a thankless task. Sure, there are several attempts being made by quant jocks to develop a model for valuing coins and tokens.  Most of these that I have reviewed suggest that prices undervalue both the underlying asset or the eventual demand.

In other words, crypto prices are cheap: what a surprise.

This bit of wisdom may be of some comfort to committed long term investors, but it hasn’t translated into higher market prices. A good example of this is Ether. Over the past six months, while Bitcoin has been treading water (down 7%), the price of Ether has been cut in half.  This altcoin was the topic of one of my recent articles called: Has Ethereum Lost It’s Cache?

The essence of this article was to point out how Ethereum, the platform preferred by 75%-80% of all ICOs, was suffering from investor indifference.  When you measure the activity of the top 100 tokens according to CoinMarketCap.com, the US dollar value of 9 of the top 10 most actively traded amounted to an average of $14,000 over the previous 24 hours.  Please keep in mind, trading activity in ETH over the same 24 hour period amounted to $1.8 billion USD.

Bloomberg Speak

One of the more interesting contradictions to my research into Ethereum’s plight comes from an article originating from a highly respected source: Bloomberg News.  The headline reads: “Ether Tumbles as Concern Increases That ICOs Are Cashing Out”.  It is totally defies the data to believe that every ICO cashing out when there is almost no volume to confirm this claim.

Quoting from an August 13th article:

Initial coin offerings using the Ethereum blockchain are seen as one of the main catalysts for sending Ether’s price surging last year. Now they’re being blamed for its decline.

It is quite true that initial coin offerings using the Ethereum blockchain was a catalyst for sending Ether’s price surging last year. It gave investors a reason to buy Ether even if they didn’t tell an ICO from a UFO. But are ICOs the real blame for both the good and the bad of Ethereum price?  I will step aside and let you be the judge.

For starters it is important to remember that ICOs raised $2.4 billion last year while ETH value appreciated almost $70 billion. The concept of ICOs may have fueled blind speculation but the math tells us that real demand was much less.

As for taking the blame for falling ETH prices, consider this notion. At its peak in January ETH was valued at $133 billion.  Currently that value is $100 billion+ lower than just eights months ago.

Using the data from ICOWatchList.com, since the beginning of 2017 ICOs have raised a total of $8.5 billion.  The statistical experts claim the Ethereum platform was used by between 80%-83% of all ICOs, thus reducing the $8.5 billion number to $5.7 billion.  

There is no question that ICOs influenced ETH speculators but that doesn’t begin to explain the more than $600 billion in aggregate losses for all crypto assets.   

Criticism Of Startup Managements

Critics claim that ICOs give startups the ability to raise lots of capital but they are proving weak in management on the funds once they are in their crypto wallet.  There is a certain validity to this since the number of founders with deep experience as CEOs and CFOs is pretty limited. But how can anyone separate insider selling activity from all other volume?

Research website Santiment, which compiles a selection of Ethereum-based projects, estimates startups have spent over 110,000 Ether in the past 30 days. At current prices that amounts to about $33 million.  For sake of discussion, let’s assume this high rate of token liquidation took place each and every month this year. Then use and average ETH price of $700 and that brings the total to $616 million.

There is no question that ICO sellers have contributed to the decline in ETH.  It would even be fair to call it a catalyst that created fear of losing all (FOLA).  Now if we could only quantify fear with an index like the VIX used by stock investors, we would see the major cause of the decline.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 97 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Commodity Update: Wheat Not Yet Out of the Woods

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Wheat (WHEAT/USD) is up 29.12% year-to-date as the market came to life early this year. The successful defense of a key support level attracted investors who were staying on the sidelines for years while waiting for a tradeable bottom. This ignited a powerful rally that saw the pair generate volume that’s never been seen in over 15 years. As a result, many investors believe that Wheat may have finally reversed its trend.

In the midst of the bullish rally, it appears that bears are pulling the biggest trick that’s up their sleeve. In this article, we explore why Wheat is not yet out of the woods.

Premature Reversal for Wheat

A quick look at the daily and weekly charts reveals that the commodity appears to have broken out of a cup and handle pattern. From a short-term perspective, the market registered a higher low of $3.908 in December 2017. This gave bulls the confidence to stage a massive rally. The rally eradicated resistance of $5.00 in July 2018 with colossal volume.

Weekly chart of Wheat

The price action has led many to believe that the multi-year downtrend is over. But what if it isn’t?    

Major Roadblocks Ahead

A long-term view of the commodity reveals that it’s still in a downtrend. The market’s inability to close above $5.50 on the weekly and monthly charts is a signal that bears are not yet ready to hand over the keys to the kingdom. They are fighting back and so far, it seems that they have the upper hand.

Monthly chart of Wheat

Wheat is not reversing the trend as long as it respects the long-term resistance. This trendline has existed for 10 years and it is responsible for the commodity’s multi-year downtrend. From this perspective, it is easy to see that the pair continues to post lower highs and a lower low, which is the textbook definition of a downtrend.

Wheat still in a downtrend

Projected Movements

It’s not gloom and doom for bulls however. Even though a major resistance is staring down at them, they might still be able to come out on top. Keep in mind, bulls posted a record-shattering volume in July when Wheat went above $5.00. That means $5.00 has now become a key support level. It might just be strong enough to ignite a new rally and finally take out the long-term resistance.

Possible movements of Wheat

Otherwise, the record-breaking volume would work against bulls. All of those who bought above $5.00 are most likely using the support as a stop loss. Breach of this support would ignite a selling frenzy that can drive the market to even lower levels.

It is very possible that Wheat could capitulate during this plummet. When it does, there will be a long-term support where bulls can stage a rally to break out of the large falling wedge on the monthly chart.

Bottom Line

Wheat’s recent move above $5.00 with massive volume has attracted a lot of investors. The market may look bullish but in reality, it needs to deal with a long-term resistance before it can reverse its trend. In other words, Wheat is not yet out of the woods.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 224 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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