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Long-Term Cryptocurrency Analysis: Ethereum, Ripple, Litecoin

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On Wednesday night, several traders were wondering if the cryptocurrency market was in for another major correction, as Bitcoin fell by 10% in a short period of time. To answer that question, we took a step back and looked at the long-term chart of the most valuable crypto-coin. We concluded that it’s still in an uptrend both short-and long-term, but also added that:

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Is this the best time to buy Bitcoin for the long run? Probably not, even if the fundamentals are there, and it will most likely rise much further than the current levels. So, why it is not a good idea to buy it? Because a 30%-40%-50% correction, that has been normal for Bitcoin in the past, is a huge psychological burden that makes a panic sale likely, usually just before the bottom. Because of this, it is better to wait for the correction and oversold readings, even if you will buy it at a higher price later on.

Not All Coins Are Created Equal

Are the other cryptocurrencies any different regarding the long-term picture?  As all the major coins were strongly correlated during the 30+% correction two weeks ago, one might believe that, in fact, all of the coins have a similar long-term technical setup. Today we will take a look at the other three most traded cryptocurrencies, and show that this is not entirely correct.

Ethereum

ETH/USD, Long-Term (Daily) Chart

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Ethereum is in a similar technical position as Bitcoin, being overbought after a monster rally, right at its all-time highs. ETH dropped as much as 50% two weeks ago but that wasn’t enough to clear the overbought readings on the momentum indicators because of the quick snapback rally. Last time ETH was showing neutral momentum readings on the daily chart was in late April, when the price was at $50. This year Ethereum experienced a 500% and a 600% rally, both coming after a consolidation period.

Litecoin

 

LTC/USD, Long-Term (Daily) Chart

Litecoin’s chart is looking promising from a long-term perspective, as LTC is after a lengthy and deep (-55%, after 1000% of gains in 5 weeks) correction, while several signs point to a bullish turning point. The MACD indicator provided a buy signal, the price has been consolidating in a narrow range below the top of the consolidation pattern, and trading volumes have been declining progressively during the correction. While it is entirely possible that LTC will consolidate more if Bitcoin enters a correction, it will likely outperform both BTC and ETH in the coming weeks.

Ripple

 

XRP/USD, Long-Term (Daily) Chart

Ripple has been the most volatile major coin, rising 7-fold in two months, and experiencing a 70% decline since then. The three-week long correction carried the MACD indicator close to neutral territory, but it still shows bearish readings. XRP might need more consolidation before a significant break-out, but it is closer to a long-term buy signal than BTC or ETH.

How to Use These Charts?

If you believe that cryptocurrencies are just at the beginning of their success stories, then there are several ways to profit from the boom. 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 are some of the possible strategies:

  • 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)

We will keep on providing all the short- and long-term information you need to pursue whatever strategy you choose. Stay tuned for our detailed analysis on every weekday.

 

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4 Comments

4 Comments

  1. embersburnbrightly

    June 10, 2017 at 4:32 pm

    Thank you for another very valuable article. I was very excited to read your forecast for Litecoin, as my initial venture into cryptocurrency involved largely primary investments into LTC and ETH; with me since holding on to LTC with varying degrees of certainty. I’m also happy to hear that my default investment strategy looks to be a wise one: “Buy and hold a core position and add on the major dips; a very powerful strategy.”

  2. embersburnbrightly

    June 10, 2017 at 4:38 pm

    I’ll hate myself later for this corny poem, which just came to me as I realized a bit of a rhyme in part of a sentence above; but here goes:

    I’m holding on to LTC,
    With varying degrees of certainty.

    I think I’ll hold tight,
    Think the move’s right;
    Eventually I’ll make a fortune overnight.

    (I’m so sorry, everyone; I accept your scorn.)

    🙂

  3. hollyjoykersh

    June 10, 2017 at 5:06 pm

    Really good article. Thanks!!

  4. kochelli

    June 10, 2017 at 7:25 pm

    XRP is killing me. When will the madness end? I’m losing faith in the coin itself. I notice you don’t talk much about the characteristics of coins too often. When does something like that come into play for you?

    I’ve not done any investing in the past so all of your insights about consolidation patterns and such is all new. I’ve done very well on ETH but I keep thinking of just dumping the XRP because I am convincing myself that people have lost faith in the coin.

    Any insights here?

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Analysis

Long-Term Analysis of the Silver Market

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Silver

The silver market has once again caught investors’ interest as the price is nearing areas not seen since late 2008.

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2017 started at a low point for silver, and it seems it will end the year that way as well, meaning investors who bought at the beginning of the year haven’t suffered nor gained much.

This doesn’t mean, however, that the price hasn’t moved during the year. After the low start of the year, silver quickly tacked on about 18% to a top of $17.50 per ounce.

In terms of fundamentals in the silver market, things look a bit complicated for 2018. There are multiple forces pulling in different directions for the price of silver going forward:

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Positives

  • A sharp stock market correction can be expected to occur some time in 2018. Most likely, this will happen sooner rather than later. Stock market crashes always trigger a flight to safety, meaning gold, silver, and quite possibly bitcoin, can benefit.
  • We are seeing signs that inflation may be starting to rise again, although this is not confirmed yet. Rising inflation is always good for precious metals.
  • If the US federal budget deficit widens as a result of the new tax reform, the US dollar may suffer as a consequence. Goldman Sachs put out a note to investors in November 2017 saying that the US debt is “on track” to reach an “unsustainable” level in coming years. Fed Chair Janet Yellen has also said about the US debt that it is “the type of thing that should keep people awake at night.” Rising debt levels creates uncertainty about the economy, which is generally good for gold and silver.

Negatives

  • Central banks around the world seem committed to raise interest rates in 2018. Rising interest rates are bad for precious metals because it would make it more attractive to put money in the bank.
  • The cryptocurrency bull market is on track to continue, diverting attention and capital away from precious metals as a traditional store of value. However, this one is uncertain, as it may also be considered a positive in the way that the rise of cryptocurrencies brings the inflationary and unsustainable nature of fiat currencies into focus.
  • The US dollar may have hit a bottom in 2017 and trade higher compared to other major fiat currencies going into 2018. A stronger dollar is always bad for precious metals, which are priced in dollars.

Silver chart

When looking at the chart, we can see that silver is back down to were it started the year, which coincides with a major support area where it has turned several times in the past few years.

From a technical perspective, silver has been trading in a triangle pattern on the longer-term weekly chart, with the price now trading very near the lower end of the triangle, adding confluence to our bias that silver will trade up from here.

Silver failed to live up to our prediction from early 2017, and is now even trading well below the level from that time.

A low price by any measure combined with two major technical support levels adds confidence to our trade and makes silver a low risk and potentially high reward trade for 2018.

Depending on your own strategy and investment style, you may want to wait for the price to break out from the current triangle pattern it has been trading in for the past year and a half. You would then give up some of the potential return for an even safer trade. After that, major resistance is found around $17.50 and $18, with lots of upside potential if we can finally break through those levels.

Featured image from Pixabay.

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Analysis

Long-Term Cryptocurrency Analysis: Look Out Below?

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After last week’s observation that a major top is in or near in the segment, the Bitcoin surge continued for almost a week, with Thursday’s wild session taking the coin as high as $19,000 (the article uses Bitstamp prices) on some exchanges. While the currency already pulled back by more than 20% the long-term picture is still extremely overbought and a much deeper correction is likely in the coming weeks.

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BTC spiked below $13,000 today, violating the primary weak support at $13,300, with further levels now at $11,300, $10,000 and $9000, but stronger support only found at $8200 and $7700. Next week’s futures launch could cause another jump in trading activity, and volatility is expected to remain very high amid the likely correction.

BTC/USD, Daily Chart Analysis

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While not all altcoins participated in the, supposedly, last part of the rally, IOTA, Monero, and towards the end of the week Litecoin, also stretched above all conventional targets with IOTA also turning exponential after a deal with Microsoft. The coin exploded by more than 350% before entering an initial sharp correction, breaking the steepest short-term uptrend. Strong support is only found at $3 and $1.5, but potential Fibonacci support is at $2.35.

IOT/USD, Daily Chart Analysis

Let’s see how the long-term charts of the other altcoins look after the crazy week.

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Analysis

Daily Analysis: Stocks Rise on Mixed Jobs Report, Bank gains as Bitcoin Wobbles

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2651 0.45%
DAX 13153 0.85%
WTI Crude Oil 57.34 1.12%
GOLD 1250.00 0.21%
Bitcoin 15775 -4.10%
EUR/USD 1.1774 -0.01%

The “Week of Bitcoin” ended on a positive note regarding traditional financial assets, with several bullish catalysts helping the recently struggling indices in Europe and the US. Asia settled down after a period of pronounced weakness, the finalized framework of the new regulation of the European banking sector favored the banks, end the US employment report was mixed enough but not too bad to help equities. While these don’t sound that bullish from a long-term perspective, in the world of central bank dependency, a sluggish growth environment fuels the yield-seeking rally in stocks.

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S&P 500 at All-Time Highs, 4-Hour Chart Analysis

Short-term rates declined thanks to the slightly negative economic news, and as Trump’s decision regarding Jerusalem sparked widespread protests in the Middle East, gold and long-dated treasuries rebounded, as a sign of moderate safe-haven flows. The VIX shrugged off the geopolitical fears and stock volatility plunged back near its recent record lows, while the DOW and the S&P 500 finished on new all-time closing highs, even as the intraday highs from Monday are still ahead of the benchmarks.

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Last night’s Brexit deal caused a “sell the news” dip in the Great British Pound even amid the risk-on sentiment, as the currency lost ground compared to its major counterparts, while the rest of the forex complex finished a choppy session close to unchanged on the eventful day.

EUR/GBP, 4-Hour Chart Analysis

Cryptocurrencies

All eyes were still on Bitcoin and the major altcoins as trading activity skyrocketed in the cryptocurrency segment thanks to the exponential rally and the sharp correction in the market of BTC. The coin hit a new all-time high on all exchanges, albeit at widely diverging levels, as several exchanges broke under the weight of the record volumes.

Bitcoin fell as much as $3000, more than 20% top-to-bottom, but as we speak the currency is regaining momentum and we might be in for another interesting weekend in the segment. While it seems very likely that a sharp correction is just around the corner, picking a top in BTC is not an easy feat, even as the momentum indicators are off the charts.

BTC/USD, 4-Hour Chart Analysis

Altcoins benefited from the early sell-off in Bitcoin, and Litecoin even rallied to a fresh all-time high, while the other majors rose significantly as well.  Although the currency and the segment as a whole are stretched by all measures, and the risks of a “fake-out” our high, speculative flows could propel another rally in LTC.

LTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
1:50 JAPAN GDP 0.6% 0.4% 0.3%
Tent. CHINA Trade Balance 264 bill 231 bill 254 bill
11:30 UK Manufacturing Production 0.1% 0.1% 0.7%
15:30 US Hourly Earnings 0.2% 0.3% 0.0%
15:30 US Non Farm Payrolls 228,000 198,000 261,000

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