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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.

Ethereum

ETH/USD, Daily Chart Analysis

Ethereum is holding up well this weekend amid the BTC correction, although the coin didn’t participate in the previous surge, and the long-term momentum indicators didn’t reach extreme levels. For that reason, we don’t expect a similarly deep correction, especially after the previous long consolidation phase. That said, volatile range-trading will likely develop, with possible tests of the $380 and $350 levels, while primary support is found at the prior high near $400.

Litecoin

LTC/USD, Daily Chart Analysis

Trading activity exploded in Litecoin yesterday, as the coin surged above the prior high near $100 and spiked as high as $165 today, despite the long-term overbought readings. While further gains are not out of the cards, traders should take profits after the lofty gains, while investors should definitely wait for a more favorable long-term setup to add to their positions. Key support levels are found below $100 at $75 and $64.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple remains the only major with neutral long-term momentum readings, as the relatively weak coin still trades in the broad trading range that developed back in May. The coin is still bullish from an investment perspective and investors could still add to their positions during the short-term corrections. Support is still found at $0.2250, just below $0.20, and at $0.18, while resistance is ahead at $0.26 and between $0.30 and $0.32.

Dash

DASH/USD, Daily Chart Analysis

Dash held up very strongly amid the volatile correction, proving its apparent relative strength once again. That said, the coin is clearly overbought, and although we expect it to remain strong in the coming months, a deep correction is likely. Key support levels are still found at just above $600, at $500, $470, and near $410.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic’s continued its correction after its stellar rally, and tested the $23 level yet again, while exiting the steep short-term uptrend. Despite the 30% correction, the coin is still overbought and we expect more downside in the coming weeks with a possible test of the next major support level at $18, while resistance levels are now ahead at $30 and $32.

Monero

XMR/USD, Daily Chart Analysis

Monero surpassed all our targets and hit the $300 level during the week, and the coin reached extreme levels regarding the daily momentum indicators. The coin is already down by 20% from its highs but we still expect a deeper correction in the coming weeks, with support levels just below the current price at $240, $200, $180, and $150.

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

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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4.5 stars on average, based on 231 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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  1. saxonlucius

    December 10, 2017 at 4:07 am

    The list of possible strategies is spot on. I keep impulse buying. Its so not good, but it did make me a lot of money before doing the impulse buying. The market is just so volatile. Monero blew my mind. I can’t believe it. You know, I think that when Bitcoin hits the major exchanges tomorrow, some other currency has to kind of, take Bitcoins place on the private exchanges. It has to be the lead as the non-public crypto. I think Monero or Litecoin are both really good contenders for this spot. They both are almost as old as Bitcoin, have the same models, and use the same hashing SHA-256. Ether might be do really well also, but Ether is just different and so is Bitcoin Cash. Monero could take that spot. Its anonymity is good. The crypto exchanges are just insane. I’m amazed at the activity. It has been a crazy week.

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Analysis

Technical Update: NASDAQ and S&P 500 Approaching their Intermediate-Term Supports

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Technical Overview

  • After breaking their short-term supports (white trendlines in Figure 1, 2 & 3) on Friday (April 20), U.S. indices continued sliding into this week.
  • Given the lack of any major support levels within the range spanning from the low on April 2 to the high on April 18, U.S. indices moved sharply lower on Tuesday (April 24).

S&P 500

  • Next major resistance – the trendline connecting the January & March highs (orange trendline in Figure 1, currently at 2,736).
  • Next major support – the intermediate-term support (ITS – violet trendline, currently at 2,605).

Figure 1. S&P 500 Daily

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NASDAQ

  • NASDAQ’s intermediate-term support (ITS) is of extreme importance as it overlaps with the neckline of a large H&S pattern (tops – red ellipses in Figure 2). A break below the ITS activates a target of 6,000 (vertical yellow trendline). Note, the pattern is tentative until the neckline is broken.
  • Next major resistance – the trendline connecting the March & April highs (orange trendline, currently at 7,265).
  • Next major support – the intermediate-term support (violet trendline, currently at 6,885)

Figure 2. NASDAQ Daily Chart

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DJIA

  • Today’s decline intensified after the index broke back below its 2018 Resistance (red trendline Figure 3).
  • Next major resistance – 2018 Resistance is expected to continue serving as resistance after today’s move below it
  • Next major support – Feb & April lows at roughly 23,350 (green horizontal trendline).

 Figure 3. Dow Jones Industrial Average Daily Chart

Implications

  • Breaks of the intermediate-term supports for both S&P 500 and NASDAQ will carry significant bearish implications, with downside targets of at least 10 to 15%.
  • NASDAQ’s monthly chart depicts why a potential break of the ITS may lead to declines sharper than the ones observed in February and mid-March. Since June 2016, the index has marched higher, in an almost vertical fashion. Upward movement implied by the steep slope of the intermediate-term support is unsustainable in the very long run (violet trendline in Figure 4). Eventually, once the ITS is broken, the index is expected to retest its long-term support (dark blue trendline).

Figure 4. NASDAQ Monthly Chart

Outlook

  • Neutral with a bearish bias. While price action points to a likely retest and potential break of the intermediate term supports, outlook is not outright bearish until confirmation is received.
  • Short- and long-term bearish if S&P 500 and NASDAQ break their respective intermediate-term supports.
  • S&P 500 and NASDAQ need to hold their intermediate-term supports and break above the orange trendlines for outlook to shift to bullish, at least in the short-term.

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

ICON versus TenX: What You Should Know

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There are so many cryptocurrencies out there.  As the flow of ICOs continues, more tokens are added almost daily.  It may be some consolation that more the 80% of these tokens use the Ethereum platform and that means their value is connected to the mothership.  It may also help to remember that there are plenty of crypto exchanges that will unload your coin once the ICO is complete.

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That’s fine, but this takes time not to mention the fees that get tacked on along the way.  And if there has been a proliferation of currencies, now about every Fortune 500 company wants their own blockchain.  Instead of putting all of our efforts on figuring out who has the smartest contracts or which is the best crypto, maybe we should look for someone to connect all these dots.  My guess is this notion will be a big feature of Gen IV crypto technology.

Here Are Two Prospects

Of the most successful ICOs in 2017, two are really eye catching for their vision of connecting cryptocurrencies and networks.

TenX claims they will make all cryptocurrencies spendable through a debit card ranked. That vision made them $64 million during their token sale, enough for the tenth spot on the list of largest intakes. 

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The ICON project will be building one of the largest decentralized networks in the world. The total raised of $43 million was good enough for the #13 ranking of top 2017 ICOs. Before going deeper, let’s first take a look at TenX.

TenX Could Be a 10

TenX has an audacious plan to connect digital currencies and in the process disrupt one of the biggest financial monopolies in existence.  They are out to create a massive payment channel dubbed COMIT which stands for Cryptographically-secure Off-chain Multi-asset Instant Transmission network.  How does their white paper describe COMIT? It looks just like the Internet.

In simple terms, TenX is out to get a banking license, then use their own debit card running on the COMIT network to challenge the MasterCard, Visa, American Express monopoly.  The beauty of TenX is the ability to use any coin or token to buy goods and services with one card.

Even if a merchant doesn’t happen to accept crypto, no problem, TenX converts the crypto to the fiat currency.

This is the future of cryptocurrencies.  As bitcoin leads the way with some 10,000 mostly online merchants acceptance of other cryptos will follow. However, the amount of time involved in winning the game will be considerable. We are talking about a startup company attempting to capitalize on mass adoption of crypto as a medium of exchange.  So far fewer than 1% of all transactions fit that category.

Around the year 2000, online merchants accounted for 1% of all retail sales.  Some 18 years later, it amounts to just under 10%.

ICON: Connecting Networks

For those who really enjoy digging into the technical detail, here is how their whitepaper describes the project.

With ICON, numbers of blockchains are connected around Nexus via Portal. Nexus is a loopchainbased blockchain. Nexus is a Multi-Channel blockchain comprised of Light Client of respective blockchains.

Tokens called ICX (ICON Exchange) are embedded in Nexus and the interconnected blockchains can use ICX to transfer values. As a blockchain itself, Nexus can be connected to another Nexus, allowing different blockchains with different governance structures to execute transactions and exchange values.

For us simpler folks, think of the earliest days of the Internet.  Over 30 years ago, the Internet consisted of a bazillion independent networks throughout the world.  Then somebody came up with TCP/IP and presto, the modern Internet was born.

Use cases for ICX go beyond connecting currencies – they connect blockchains and that means doing something akin to TCP/IP.  So we are talking about things like connecting separate health systems and much more.

Just like TenX, the question for ICON is how long their plan will take and will $43 million be enough to deliver the bacon. However, for those investors looking for a Gen IV play, ICON is a candidate.  

Like about every other currency, ICX came down hard from its $9.95 price on January 30 to a $1.89 low earlier this month. Since then it has bounced back and is hovering around $4.30 at the time of this writing.  Raising $43 million may not be enough to get ICON to the promised land but it shows that a lot of serious investors did their research and bought the promise.

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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4.4 stars on average, based on 62 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Crypto Update: Ethereum Tops $700 as Short-Term Sell Signals Pop Up

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The major cryptocurrencies are having another strong session, with all of the top 10 coins sporting gains, adding more than 5% on average since yesterday. The largest digital currencies are trading in clear short-term uptrends, with the broad declining trendlines also being broken in most cases.

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That said, the short-term momentum indicators are overbought with regards to altcoins, and now several majors triggered short-term sell signals following the first signal by IOTA yesterday. While this doesn’t mean that traders should exit all short-term positions here, taking some profits and/or setting tighter stop losses is advised, as there will likely be opportunities with much better risk/reward profiles to re-enter the market.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin finally topped the $9000-$9200 resistance zone after a period of relative weakness, further boosting the already positive overall picture. The momentum of the move is still not stellar, but the coin is still not severely overbought, and although a deeper pullback is still likely soon and short-term traders shouldn’t open new positions here, a test of the $10,000 level is still possible in the coming days. The long-term setup is clearly bullish, and investors could still add to their holdings during the short-term pullbacks, with further support found at $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum continued to rally, despite the already overbought reading, and now the coin is severely overbought, and a correction is very likely in the coming days, so short-term traders should exit their positions or use tight stop losses here. We expect the rally to continue after a correction, and long-term investors should hold on to their coins. Resistance zones are ahead near $735 and $780, while primary support is between $625 and $645.

Altcoins Overbought but Uptrend Intact

XMR/USD, 4-Hour Chart Analysis

While correlations are getting lower and lower among the major coins, which is a bullish sign, most of them are already overbought from a short-term perspective. Although further gains are still possible, chasing those coins higher here is not a good strategy, even as the long-term setups remain encouraging.

Litecoin, ETC, and NEO are not severely overbought yet, while Ripple, Stellar, and Cardano are already in short-term corrections clearing the overbought readings, but traders should be cautious with Dash, EOS, Monero, and IOTA as they are ripe for a move lower.

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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4.5 stars on average, based on 231 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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