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Crypto Pullback – Where’s the Support?

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Looks like we have some panic selling on the top cryptos this morning.

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Ripple has slipped below support of $1.5 per XRP and bitcoin has just fallen through $12,000.

The reason for the sell-off is not quite clear but we can see reduced volumes from Japan and South Korea who are usually the ones doing the heavy buying in this market.

In today’s market webinar we’re going to talk about where might be a good place to buy this dip and how to position your portfolio during this kind of pullback.

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The webinar will be at 15:00 GMT and is open to everyone.

https://register.gotowebinar.com/rt/1157869693061562371

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Good Returns
  • Swiss Depreciation
  • Crypto Pullback – How low can you go?

Please note: All data, figures & graphs are valid as of January 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional markets

Today investors on Wall Street will be coming back from their long weekend in a particularly good mood. The stocks have been flying in Asia so far this year and the Europeans have done a good job recouping the losses from December.

Wall Street herself has been having a record year so far so as long as these trends continue…

Even the bond market, which gave us a bit of a fright last week seems to be cooling down. The US 20 year treasuries have found support at 122.5 and are now holding near their yearly average price.

Swiss Event Today

Thomas Jordan rarely moves the markets but when he does, he does big. Today he will be speaking at the University of Zurich and delivering a speech about how money is created. A subject I’m sure we all would like to know more about.

No doubt he’ll be talking about how the central banks of the world have increased the amount of money in the system over the last decade and how the local banks have leveraged this money.

What he probably should be talking about is how to reduce the money supply from a system that is flooded with capital.

We’ll be watching his speech today with great interest, which will take place at 18:00 Swiss time. Just after our webinar. 😉

For reference, here’s a chart of the Euro against the Swiss Franc. Just about every large movement on this chart, and there are quite a few notable ones, have been created by Mr. Jordan. So it pays to pay attention to what he says.

The Crypto Pullback

The pullback seems to be coming from a lack of volumes in Asia. Cryptotraders in Japan and South Korea tend to dominate this market but so far this year have been notably silent.

Reports from Bloomberg of a further crackdown in China are not helping things but the real story here is Japan.

Japan was the first country in the world to fully legalize bitcoin as a currency last March and investments in BTC have reportedly raised the countries GDP significantly. The digital currency frenzy is also making a blockbuster entrance into Japanese Pop Culture with the new girl band…

So to see Japanese Bitcoin volumes of just 11% of the market at 18:00 Tokyo time is kind of odd.

My best guess is that Japanese and Korean traders are simply tired of paying the premium and are waiting for the market to even out. The price per bitcoin in these two countries is usually more than 25% above the prices in the West. So they might just be taking a step back, waiting for the FUD to blow over and get a better entry price.

The issue is that the markets have gone up so quickly that they didn’t have enough time to build in proper support. Here we can see that bitcoin does have some temporary support at the moment but if it does fall through it we could easily find ourselves below $10,000 pretty quickly and that’s a scary thought for some.

Whatever is causing this pullback it is making a lot of people nervous, which is why we should always remember that even though crypto has been the best performing asset class in history over the last year it’s still incredibly risky. No doubt many will see this dip as an excellent opportunity to get in but anybody who bought at the top is not doing well at the moment.

Hope to see you in the webinar. Let’s have an awesome day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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 34 rated postsSenior Market Analyst at Etoro.com.




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3 Comments

3 Comments

  1. mkyle13

    January 17, 2018 at 10:31 am

    I clicked the webinar link but it took me to a recording. Is there live one today?

    Thanks,

    Matt

  2. BAGGYSPORT

    January 17, 2018 at 10:36 am

    at last someone trying give a clear reason why this dip in prices.
    well written, thanks

  3. ggonzaga

    January 17, 2018 at 4:57 pm

    I am unable to attend the webinar, but I am interested in the content. Is there any way I can see the recording later today? Please let me know if anyone can help.

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Analysis

Technical Analysis: Majors Stage Rally but Strong Levels Still Ahead

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The cryptocurrency segment has recovered from a broad correction today in early trading, with the most valuable coins all turning into green during the session, despite the bearish start to the overnight session. With bottom-to-top gains of up to 15%, the rally helped in easing the worries of bulls, especially in the case of the relatively weaker coins.

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Bitcoin and most of the largest altcoins remained stable during the selloff, and BTC recaptured the $10,000 level quickly after trading as low as $9600 overnight. The initial rally topped out near $10,400, and the coin is trading back near the $10,000 level, as the bullish momentum faded away somewhat.

BTC/USD, 4-Hour Chart Analysis

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That said, we expect the uptrend to continue even if the correction could still carry Bitcoin lower. Further strong support is found between $9000 and $9200, while targets are ahead at $11,300, $13,000, and $14,250.

ETH/USD, 4-Hour Chart Analysis

Ethereum showed strength during the bounce again after yesterday, together with the early leaders of the rally, and although the coin dipped below the $845 level in the second half of the session, the signs remain positive for bulls. Support levels are now found at $780, $740, $625 and $575, while resistance is ahead near $910 and $1000.

(more…)

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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6 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 5 (6 votes, average: 4.83 out of 5)
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4.7 stars on average, based on 115 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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Analysis

Crypto Update: Encouraging Bounce before the Weekend

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The correction that started out in the major lagging altcoins and spread to the leaders of the market yesterday is weakening, with a nice rally today in early trading in most of the majors.  Although the segment is not out of the woods just yet, the bullish signs which have been present ever since the lows three weeks ago still persist.

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Bitcoin stayed clear of the key $9000-$9200 support zone, for now at least, which would be an ideal bottom for the correction, but as we noted long-term investors should accumulate the coin during the correction, as the short-term momentum is already back to neutral. The $10,000 level is still in the focus, while the next major resistance is found at $11,300 and the prior rally high near $11,750 is also ahead as an obstacle.

BTC/USD, 4-Hour Chart Analysis

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The early leaders of the rally, Litecoin and Ethereum Classic are once again showing strength and that could signal that the next leg higher already started. That said, with several coins still stuck in broader downtrends, investors should still expect a bumpy road, with the occasional volatile sell-off.

Litecoin got very close to the $180 support that we have been monitoring throughout the correction, but it quickly bounced above the $200 level again, as the broad bounce started after testing the previously dominant declining trendline. So far, the price action in the coin is consistent with a new uptrend and we still expect LTC to lead the market higher.

LTC/USD, 4-Hour Chart Analysis

Ethereum Showing Positive Signs Again

ETH/USD, 4-Hour Chart Analysis

After yesterday’s early signs of relative strength, the second largest coin is now clearly showing evidence of accumulation, as it quickly recovered above the $845 level following the selloff after the US close. The coin established a new support near $780, and as the MACD is close to providing a bullish cross, it might signal the bottom of the correction.

Despite the bullish price action across the board, even in the recently lagging XRP and IOTA, the correction could still continue, but we still advise traders and investors to look for entry points as we expect the recovery to continue, although traders should still use smaller positions in the relatively weaker coins.

Stay tuned for our detailed technical analysis later on today.

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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4.7 stars on average, based on 115 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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Analysis

Technical Analysis: Correction Continues but Coins Remain Stable

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It’s been another mixed session for cryptocurrency investors as judging by only the price action, the segment suffered losses across the board, but comparing the current sell-off to the January plunge reveals that the majors are much more resilient this time around.

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The largest digital currencies are holding on to most of the gains of the recent weeks, and the price action near the crucial support zones is also encouraging. With all that said, the correction is not over yet, and further losses are still in the cards, but barring a substantial change in price action, the coins will likely continue the rally.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin has been trading around the key $10,000 level all day long, and, so far, a clear break-down has been averted. The short-term momentum indicators are now in neutral territory regarding the most valuable coin, and that could mean that a bottom is close, and investors should already add to their holdings here. Further strong support is found between $9000 and $9200, while targets are ahead at $11,300, $13,000, and $14,250.

XMR/USDT, 4-Hour Chart Analysis

Correlation between the majors has increased during the sell-off, but there are still clear outperformers and laggards, adding to the bullish case. Monero remains among the strongest coins from a technical perspective, trading right at the lower boundary of the bullish consolidation pattern, with the $280 price level holding up for now. The coin faces strong resistance near $300 and $335, but we expect the uptrend to continue with the next target being ahead at $400, while further support is found at $240.

(more…)

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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9 votes, average: 4.33 out of 59 votes, average: 4.33 out of 59 votes, average: 4.33 out of 59 votes, average: 4.33 out of 59 votes, average: 4.33 out of 5 (9 votes, average: 4.33 out of 5)
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4.7 stars on average, based on 115 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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