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Long-Term Cryptocurrency Analysis: Bitcoin Enters Correction as Altcoins Break Out

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The segment had a very eventful week, considering the cancellation of the Segwit2x fork, the bullish moves in several of the major altcoins, the new high in Bitcoin Cash, and the late-week dip of Bitcoin that stirred up the market.

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BTC spiked higher to hit a new record high right after the Segwit2x drama, but the long-term forces got the better of the coin, and it fell more than 20% top-to-bottom, to hit a short-term low near $6300. The long-term setup remains overbought, and we expect further correction in the coming week, with support levels at $6300, $6000, $5800, and $5400. Traders and investors should wait with opening new positions, as a re-test of the previous major break-out level at $5000 is likely before the end of the deeper correction.

BTC/USD, Daily Chart Analysis

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The prospects of the major altcoins still look more promising, even after the gains of the week, although volatility will likely remain elevated thanks to Bitcoin. Ethereum and Ripple are lagging their peers in the current move, as first Ethereum Classic and Litecoin, then Monero, IOTA, and Dash took center stage.

This weekend ETC is back in the driving seat, rallying hard today in Asian trading and hitting our next major target at $18. As the bullish setups are still intact in most of the coins, let’s see how the long-term charts look in detail after the busy week.

Ethereum

ETH/USD, Daily Chart Analysis

Ethereum is still stuck in the long-standing trading range between $285 and $315, despite the two failed rally attempts above the pattern in recent weeks. Although the coin is still above the rising long-term trendline, we would like to see a confirmation of the trend soon, in order to keep the buy signal intact. The long-term MACD remains in neutral territory thanks to the sideways price action, and targets are still ahead between $330 and $350, at $380, and near $400.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin first hit our initial target at $64 after its break-out than spiked as high as $67, just to enter a volatile short-term correction towards the end of the week. Despite the strong moves the long-term setup is virtually unchanged, with the daily MACD still being in neutral territory, and the coin being among the relatively strong majors from an investment perspective. Support levels are now found at $56, $53, and $51, with further targets ahead at $75 and $82.50.

Ripple

 

XRP/USDT, Daily Chart Analysis

Ripple experienced a failed break-out from the short-term trading range amid the altcoin rally, and it fell back into the pattern on Friday, confirming the short-term relative weakness. Traders should wait for a short-term trend change before entering new positions, while investors could add to their positions, as long-term momentum is neutral. Support is still found just below $0.20, $0.18, and $0.16, while resistance is ahead near $0.22 and $0.26.

Dash

DASH/USD, Daily Chart Analysis

Dash broke out of its lengthy correction pattern and rallied past $330 but failed to pass the $360 level for now. That said, the coin remains one of the strongest altcoins, and we expect a test of the all-time high near $400 in the coming weeks. The long-term MACD is far from being overbought, and despite the likely increase in volatility, the short-term uptrend is also encouraging. Support levels below $330 are at $300 and $265.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic consolidated its recent gains in a bullish fashion during the week, attempted a failed move above the short-term pattern on Friday, but surged up to our next target at $18 today in early trading. While the lofty gains of the coin will likely lead to more shot-term corrections, ETC remains bullish on all time-frames, and a test of the $23 resistance is likely in the coming weeks, with key support levels at $16 and $13.50.

Monero

XMR/USD, Daily Chart Analysis

Monero joined its closest peer Dash and broke-out from the lengthy consolidation pattern between $80 and $100. The coin breached our primary target level near $125 before entering a short-term correction, which left the bullish move intact. We still expect a test of the all-time high near $150 in the coming period, as the long-term momentum remains close to neutral.

IOTA

IOTA/USD, Daily Chart Analysis

IOTA led the altcoin rally regarding percentage gains, as it rallied from the vicinity of the $0.35 level and reached the $0.60 level above our primary target at $0.56 before entering a short-term correction. Traders should still play the developing uptrend, while investors should hold on to their positions here. Support levels are found between $0.45 and $0.48, while further targets are ahead at $0.64 and $0.75.

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)”

Featured image from 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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Analysis

Crypto Update: Post-Crash Oversold Bounce Ensues in Crypto-Land

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As Bitcoin plunged below $10,000 yesterday, nearing the crucial $9000 level, all of the majors followed the most valuable coin in the panic sell-off. Our trend model turned short-term neutral in most of the cases, while the long-term prospects also improved thanks to the deep and violent correction.

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Bitcoin itself already traded at slightly attractive levels, as it breached our first possible target for the correction, but we expect a lengthy bottoming process with a possible dip to the $8200 or $7650 supports.

As for the short-term, the oversold rally initiated from the lower boundary of the declining trend channel, and a choppy, hard-to-trade consolidation period is likely ahead that could last throughout the weekend. Strong overhead resistance is found at $13,000, likely capping the advance for now, while the $11,300 support/resistance level could also be in the focus in the coming sessions.

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BTC/USD, 4-Hour Chart Analysis

Altcoins

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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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Analysis

The Crypto Correction: What You Need To Know

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In the short span of about 24 hours prices of cryptocurrencies have fallen like a stone. Investors have either given back or taken losses of sizable amounts. Measuring the one-day drop: bitcoin -21%, Ether -29%, Litecoin -29%.

From its December all time high near $20,000, bitcoin has given back more than $200 billion in value. This amounts to more than 80% of the companies on the New York Stock Exchange or Nasdaq. Even for those who have experience-trading crypto, the events of the last few days can challenge nerves.

What is the right plan of action? Possibly no plan at all, by that I mean sitting tight and doing nothing, could be the best plan. What ever you choose, the first thing to do is to shut down your computer and turn off CNBC. These are all entirely emotion driven groups and right now they are making loud negative headlines reminding us of quotes from JP Morgan CEO Jamie Dimon and Warren Buffett.

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The same sources are painting a dark case today. These are the very same folks that were gaga over crypto last year while prices were rising. Now these sources are quoting Warren Buffett who predicted with a high degree of confidence that cryptocurrencies will have a bad ending.

If you listen to Christopher Harvey, Head of Equity Strategy at Wells Fargo, you get an even more dire prediction. He recently appeared on CNBC stating that the cryptocurrency price correction could spill over into the overall stock market.

There is a rule of thumb on Wall Street. If you are right 51% of the time, you are considered an investment genius. This means most opinions are wrong at least half of the time. This could be the case with today’s crypto naysayers.

Prices And Business Fundamentals Don’t Always Match

The number of true experts in cryptocurrencies is small relative to the number of investors. That means there is more emotion than usual driving prices in both directions. It is this volatility that keeps certain investors on the sidelines.

But if you have done your research and have a view of the world in 2028 short-term volatility is not your enemy. Warren Buffett, the biggest crypto naysayer is a master of long term investing. During the 2008 financial crisis, when the world was close to the brink of financial disaster, Buffett was standing by with billions to loan Goldman Sachs charging an outrageous 10% rate of interest. There is a lesson for us here.

Don’t Get Distracted By Short Term Issues

Korea is a big market for crypto demand and, along with China has produced headlines threatening to close down cryptocurrency exchanges. I have not dealt directly with any of these so the analysis of others is necessary.

These folks point out the excessive price premiums as evidence of the behavior of bad actors in the game. So any action by governments to clean up the exchanges could produce a better experience for investors. And let us not forget cryptocurrencies are global. There are plenty of exchanges in the world that make markets.

Korea does not have a monopoly on bad actors. The exchange and lending platform Bitconnect, in recent days, announced that it is closing. The company was recently served with a cease and desist order. Ethereum founders had criticized the exchange for their practices that many believe were bordering on a Bernie Madoff style Ponzi scheme.

The Tipping Point Has Been Reached

The jury is no longer debating the verdict. Cryptocurrencies have become embedded in the global economy. According to Google’s Annual Report on Search Facts, bitcoin and cryptocurrencies were the second most important topic in the world during 2017.

Bitcoin is all about fast, anonymous, low cost movement of money anywhere on the planet. Those lofty goals have not yet been achieved but with tens of thousands of businesses now accepting bitcoin including some hefty Fortune 500 companies and with the Bitcoin Lightning Network coming on, bitcoin’s shortcomings are being addressed.

Bitcoin Futures: Acceptance Is Spreading

When I learned that bitcoin futures would be traded in the US by the CME and CBOE, the only question was how long it would be before other countries recognized the legitimacy of bitcoin futures. Well, it didn’t take long. The Hong Kong securities regulators, SFC issued a report on December 11th giving investors a green light.

Within less than a year futures contracts will be available on Ethereum and possibly others.

Ethereum: The Future Is Here

Ethereum has always had a more obtuse purpose. It was never intended as a medium of exchange like bitcoin. For what it is worth, Ethereum is less likely to be singled out by governments and central banks that fear loss of economic control.

Descriptions like decentralized blockchain platform offering smart contracts and driven by Ether require some time to appreciate. Ethereum is open sourced and applications oriented. You don’t need to understand the technology you only need to envision what it can be applied to.

Ethereum co-founder Steven Nerayoff tells us the number of Ethereum projects today is already ten times the number of last year. Here are just two examples.

Unilever

Unilever, the $52+billion food and packaged goods giant, is working on a blockchain based project to better manage its massive global supply chain. So far it is only being tested but consider the size: 10,000 Malawian tea farmers. And this is just the start of their massive corporate wide supply chain. Imagine what this will look like if Unilever starts to take things seriously: stay tuned.

On The Vanguard

Now the $5 trillion Vanguard group is getting the blockchain bug.  They are the investment industry’s low cost provider. Now they are embarking on test to apply blockchain technology for data sharing.

Caveat Emptor

The reality is the cryptocurrencies are embedded in the global economy and likely to grow dynamically for a long while. This doesn’t protect us from short-term events. That is why huge price corrections are so interesting. The Warren Buffett habit of always having deep cash reserves to pounce on opportunity when frightened investors run is a strategy that has worked well over multiple decades.

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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Analysis

Technical Analysis: Bitcoin Hits First Correction Target as Volatility Reigns Supreme

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The violent correction that created a full-on panic in the cryptocurrency segment continues to unfold in a rather orderly way from a technical standpoint, reflecting the extreme nature of the preceding rally. That said, the percentage losses in some of the coins are huge, and the collapse of Bitconnect accelerated the process, spreading uncertainty among investors, and sentiment quickly got bleak.

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Bitcoin remains in the center of attention, and the most valuable coin finally breached the $10,000 level today, causing another strong wave of liquidation in the majors, that could be the base of a more durable bottom, and a consolidation in the coming days after the crazy last couple of days.

The coin is now oversold from a short-term perspective, and although further losses are likely before the end of the cycle, given the still only neutral long-term momentum readings, a counter-trend move is possible in the coming days. Below, $9000, strong support levels are still found at $8200 and near $7650.

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BTC/USD, 4-Hour Chart Analysis

Altcoins got slaughtered in the two-day crash with Ripple leading the way lower, while Ethereum also lost its relative strength amid the broad sell-off and its recent trendline break. ETH got close to the next major support level at $740 during today’s move, and as the short-term momentum is now oversold, a bounce to the zone around $1000 could be ahead. We still expect the correction to continue in the token, as the long-term momentum remains overbought, with key support at $625 and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple fell as low as the $0.85 support level during the crash, and although the coin rebounded above $1 afterward, it remains 70% off its recent all-time highs. Long-term investors could already accumulate small positions on the short-term sell-offs, although the correction will likely continue, and a prolonged consolidation phase might also be ahead. Key support levels are now found at $0.85 and $0.68, while resistance is ahead at $1.25.

XRP/USDT, 4-Hour Chart Analysis

(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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