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Long-Term Cryptocurrency Analysis: The Anatomy of a Crash

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Long-Term Cryptocurrency Analysis: The Anatomy of a Crash

Introduction

This article was posted on Saturday, 19:20, UTC.

Although the extent and the actual weight of the Chinese cryptocurrency trade ban are still questionable, the major coins outright crashed this week, accelerating the projected deep correction. The segment lost 40% of its total market value before a roaring snapback rally that eased some of the pain of crypto-bulls. Bitcoin was at the forefront of the decline, although coupled with the ICO ban, the likes of Ethereum and NEO are more affected by the new legislation, and indeed ETH fell more during the correction than BTC.

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Bitcoin is now trading back near $3600 in a very volatile environment, after breaching the $3800 level in early trading. The long-term momentum readings are quickly reaching oversold levels, and although we still expect the correction to go on in time, and a re-test of the lows is possible, the price low might already be in. Long-term investors should already be adding to their positions on the short-term dips, but a spike below the prior high could reach down to the $2800 support.

BTC/USD, Daily Chart Analysis

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The other majors are also expected to trade in volatile ranges that could be damaging for leveraged traders, but even the most overbought coins like Litecoin, Monero, and Dash are now neutral regarding the long-term picture and investors could already be looking for buying opportunities as the correction unfolds.  Let’s see the details of the daily setups.

Ethereum

ETH/USD, Daily Chart Analysis

Ethereum reached and dipped below our primary target zone for the correction yesterday, as the crash brought the coin down to $200. Now the token is trading near $250, the upper boundary of the strong support/resistance zone. The long-term picture is now slightly oversold, and the $200 level will likely be the bottom for the correction.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin spiked lower together with the broad market and found it only found support inside the long-term base formation before the huge rebound. We don’t expect the coin to re-test its lows, as several strong support levels are below the current price level, at $51, $44, and $38. The MACD indicator is neutral, and more sideways price action is likely before a sustained move higher.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple held up relatively well during yesterday’s sell-off, and the coin is back at $0.18 today, as the long-term base formation stopped the decline. XRP is holding up above the prior declining trend channel, and we still expect the currency to move towards the $0.30 level in the coming weeks, and investors could still add to their positions.

Dash

DASH/USD, Daily Chart Analysis

Dash completed a roundtrip between $300 and the prior high near $220 since last week, and the coin remains among the strongest majors. A dip back towards $265 is likely in the coming week, but we don’t expect the crash lows to be broken. Long-term investors should add to their positions short-term dips.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic is alarmingly weak after the bounce, trading well below the long-term base formation. The coin decoupled from Ripple after an extended period of similar movements, and it is now one of the weakest majors concerning the technical picture. Strong resistance is ahead around the $14 level, while support is only found near the $9.

Monero

XMR/USD, Daily Chart Analysis

Monero is also among the strongest majors, similarly to Dash, and it was among the few currencies which stayed above the June highs during the crash. The long-term MACD is back to neutral, but we expect more range trading, likely between $80 and $100, before a  sustained move higher as the broad correction concludes. Support is still found at $80 and $68, while resistance is still ahead at $125.

How to Use These Charts?

As we stressed in our article on Bitcoin: “…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here is a reminder of some of the possible strategies once again:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)”

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Mate Cser

Mate Cser

Trader 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.

Comments
  • user

    AUTHOR RH2302

    Posted on 4:06 am September 17, 2017.

    Why is NEO excluded all of a sudden?

  • View Comments (1) ...
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