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Long-Term Cryptocurrency Analysis: Correction Risk Rises as Coins Spike Lower

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It’s been a great ride for the crypto segment in the last one and a half months, as the summer correction soon transformed into a monster rally in most of the majors. Bitcoin, which emerged from the Fork-day stronger than ever, led the surge, but the rest of the market joined the party soon. As we already warned traders, the majority of the largest coins are now in overbought territory after the several 100% of gains, and today’s spike could be the beginning of a deeper market-wide correction. BTC hit a new all-time high near $5000 this week, but the momentum of the move wasn’t too convincing, and the currency is likely in the process of forming a durable top, on the heels of the lofty gains.

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BTC/USD, Daily Chart Analysis

The likes of Monero, Dash, and Litecoin are also after huge rallies, and much more favorable entry points are likely to emerge in the coming weeks. That said, Ripple, Ethereum Classic, NEM, and NEO are in different stages of the cycle and they could still deliver meaningful returns. In the case of the overbought currencies, long-term investors should take a step back and wait until the current skewed sentiment turns more negative and the coins clear the overbought condition. Let’s see how the daily charts look this weekend.

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Ethereum

ETH/USD, Daily Chart Analysis

Ethereum hit our target at $380 this week, but it topped out just below its prior all time high near $400 for now. The coin is getting overbought now after the recovery rally, and it might miss out on a new all-time high during this leg of the bull market. Strong support is now found at $330, $300, and $285.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin finally provided the break-out that we have been expecting and it even surpassed all of the long-term targets for the move. The coin is now deeply in overbought territory, and long-term investors shouldn’t open new positions here, although another push to new highs is possible in the coming days. Strong support is now found at $72, $64, and at $60 and near $56.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple continues to lag the other majors, with the coin drifting lower following the declining long-term trendline. The currency broke below the $0.16 level, proving the short-term weakness again.  While the long-term momentum is still neutral, the coin needs to hold above the $0.13 support, to maintain the long term uptrend. That said, investors could still add to their positions here, as another leg higher is more likely.

Dash

DASH/USD, Daily Chart Analysis

Dash most likely topped out just above the $400 level after the huge move from the July bottom near $120.  The coin is clearly among the most overbought majors, and we expect a correction below $300 in the coming period, although the long-term uptrend is not in any danger. Key support levels are found at near $300, and at $265.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic quickly surged to its prior all-time high after yesterday’s break-out and reached the $18, $20, and $23 targets in one move. The coin is still not overbought regarding the long-term picture and it could still be headed higher in the coming week, but volatility will likely be high, especially if the segment enters a broad correction.

Monero

XMR/USD, Daily Chart Analysis

Monero behaved very similarly to Dash recently, and the outlook is also the same for the coming period. We expect a deep correction after the monster rally, with the price dipping at least below the $100 level. The steep short-term uptrend is now broken and even short-term traders should be cautious with new positions. Crucial support levels are at $100, $80, and $68.

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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4.5 stars on average, based on 224 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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5 Comments

5 Comments

  1. Chris G

    September 2, 2017 at 10:39 pm

    Thanks mate – your guidance has been priceless, looking for long term entry points in the future …

    • Mate Cser

      September 3, 2017 at 5:55 am

      Thanks Chris, now it’s time for patience 🙂

      • Chris G

        September 4, 2017 at 5:55 pm

        Indeed! This ICO ban in china took a chunk out of eth today …

  2. Inverstor Clouseau

    September 3, 2017 at 5:22 am

    I hope a meaningful correction is underway for the sake of entry points. The huge gains have frankly been stressful

    • Chris G

      September 3, 2017 at 4:44 pm

      I’ve felt the same way lol – when the gains are so high, finding the right exit point is stress!

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Analysis

Rally Fades in Stocks as Apple Weighs on Nasdaq

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We warned yesterday that stock markets got vulnerable as the major US indices reached short-term overbought readings, and after a choppy Wednesday session, equities turned lower today in early trading. Apple fell by more than 2% in early trading on a supplier report regarding declining orders from the smartphone giant, and the sliding stock dragged the tech segment lower.

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S&P 500 Futures, 4-Hour Chart Analysis

While the short-term technical picture deteriorated, the losses are muted so far, and the rising short-term trendlines are holding up. Volatility ticked higher, with the VIX bouncing off its two-month lows, but the index is well below the levels seen in the beginning of the month, as Syria-related fears continued to ease and the Chinese-US trade spat also took the back seat in the mainstream media.

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DAX, 4-Hour Chart Analysis

Stocks finished broadly lower in Europe, while Asian equities reversed their early gains, with trading volumes still being low across the board. The economic calendar was almost empty today, with only the much worse than expected British retail sales figure adding to the string of negative surprises coming out form the UK this week. In the US, the Philly Fed index came in higher than expected, while weekly jobless claims were in line with expectations.

Dollar Stable as Short Yields Hit New Highs

2-Year Treasury Yields, 4-Hour Chart Analysis

Treasury yields resumed their rise in the quiet environment, and as the short end of the curve continues to outperform the flattening of the yield curve continues in earnest. While forex markets are still mostly flat, the Dollar is drifting higher against most of its peers in US trading.

AUD/USD, 4-Hour Chart Analysis

Commodity-related currencies are little changed, although both the Aussie and the Canadian Dollar are off their recent highs, and should they roll over, the bullish case would receive another hit.  Despite the weakening of the risk rally, crude oil continues to hit multi-year highs, with the WTI contract getting close to the $70 per dollar level today. Gold fell back below $1350, as the choppy consolidation pattern is still intact, and the slight risk-off shift wasn’t enough to trigger meaningful safe-haven flows.

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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4.5 stars on average, based on 224 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

More Chance to Go Up for Litecoin

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Litecoin short term outlook is quite positive, while in a longer term, it’s somewhat mixed. Shortly, the digital coin may face a very strong resistance at $141, being currently priced at $140. As Dmitriy Gurkovskiy, Chief Analyst at RoboForex, says, Litecoin already tried to test this level earlier this week, but did not succeed.

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In the mid-term Litecoin is trying to break out the current range, and in case it finally manages to break out $141 and stay above, it may go up to $168. Before reaching this target, however, another downtrend may be formed, with Litecoin plunging to the support at $114 again. If the bears succeed in breaking out this level, too, another sell-off target will be at $87.

Current outlook, however, is mostly positive, with the key support being at $114 and the key resistances at $141 and $168. The MACD on D1 is in its negatives, but is going up, issuing a buy signal, while the Stochastic is in the positive area and confirms its buy signal, already issued some time ago.

Fundamentally, Litecoin has got much support this week. The market started buying out the coin once the news on the token being listed at Korbit appeared. As the recent reports say, the crypto started being traded on Korbit yesterday, while withdrawal should be available starting today, Apr 19. This is important for Litecoin: first, Korbit is one of the oldest and most reliable exchanges in Korea; second, as we have already stated a few times, if the crypto becomes widespread across multiple exchanges, its liquidity gets boosted, while the accessibility simplifies the transaction processes.

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Korbit decided to hold a contest, with the top 6 LTC/KRW traders getting prizes in Litecoin (the winner gets LTC 50, the runner-up will walk away with LTC 25). Meanwhile, Litecoin being available on Korbit also helped the crypto to rise on Bitfinex.

Currently, Litecoin is one of the most volatile currencies, mostly because of it always being in the news, which does good to its promotion. As such, it was announced a few days ago that LTC would be used as a payment method, and TenX already started developing a prepaid card for that purpose.

By: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

Disclaimer
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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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I have two degrees in Social Psychology and Economy. After graduation I worked as the Head of the Laboratory of Technical and Fundamental Analysis of Financial Markets at The International Institute for Applied Systems Analysis. The experience and skills he gained helped me to realize my potential as an analyst-trader and a portfolio manager in an investment company. At the moment I'm a financial expert, writing for various financial media sources and a Chief Analyst at RoboMarkets.




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Analysis

Bitcoin Prices and Whale Sightings: Evaluating the Latest Trends

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Bitcoin’s value has skyrocketed 20% over the past eight days, but some say the upward trajectory isn’t as linear as it should be given the length of the most recent correction. The market’s sudden gyrations have left us with only one explanation: the bitcoin whales are back.

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Whale Spotting

It has been reported that the so-called bitcoin whales (those who hold oversized positions in the digital asset) dumped $100 million worth of BTC in less than 24 hours. For example, the anonymous balance of wallet 3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r declined by 6,500 BTC on Tuesday, which is equivalent to $50 million. As a result, bitcoin fell more than $200 on the major exchanges in just a few minutes.

Just one day earlier, bitcoin’s third-biggest wallet shed 6,600 units of the virtual currency at an average price of around $8,026.

Interestingly, a whale may have been responsible for the initial spike in BTC just one week ago. As we reported, a large order on Bitfinex triggered the initial spike in BTC as prices crossed $7,000 on the exchange. For the next two days, bitcoin would surge double-digits to breach $8,000 for the first time since late March.

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Investors are also keeping tabs on a high-profile whale based out of Tokyo, Japan. Nobuaki Kobayashi is in the process of liquidating billions of dollars on behalf of Mt Gox creditors. At last check, the trustee had sold about $400 million in bitcoin for an average sales price of $10,105. He’s expected to offload another $1.9 billion.

Speculation Grows

While advocates of bitcoin’s long-term value have barely flinched amid the latest downturn, speculators all but disappeared from the market. A simple analysis of Google search trends also reveals that laypeople have been losing interest in digital currencies since early February.

All that could be changing.

Cryptocurrencies have added nearly $100 billion to their market cap over the past week, with bitcoin doing much of the work. This appears to have compelled bitcoin’s large owners to sell their assets for reasons that are not yet unclear.

Of course, the multiple selloffs could just be coincidence or a bet that future prices will fall again. In the eyes of leading analysts, the latter appears to be less likely.

The head of Pantera Capital, who rarely predicts bitcoin’s future and is thus never wrong when he does, recently told clients that the digital currency has already bottom. Appearing on CNBC’s Fast Money, Dan Morehead said bitcoin’s bear market was just about over and that prices would continue rising from here on.

That said, choppy trading for bitcoin is hardly unusual and has come to be expected in a market that still lacks maturity. Whales or not, recent moves have made it harder to gauge the strength of the recovery.

That’s the message Thomas Lee of Fundstrat Global Advisors recently shared, according to Bloomberg.

“I think it feels off right now because, you know, we’ve been on a down trend since December, and now, even though the volatility hasn’t changed much, it’s hard to tell if bitcoin is trying to stage a recovery or if it’s continuing its down trend,” he said.

At the time of writing, bitcoin was valued at $8,175, having gained 3% over the past 24 hours.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.5 stars on average, based on 332 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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