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Technical Analysis: Bitcoin Falls Below $9000 as Positive Divergences Emerge

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The correction that started on Monday accelerated in the last couple of days, and a bottom could already be in after today’s overnight rout, given the panicky market action, although a re-test or another leg lower is still in the cards, as the short-term downtrends are intact in the majors.

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BTC/USD, 4-Hour Chart Analysis

Bitcoin has been leading the way lower, with the Mt. Gox Whale reports driving the most valuable coin’s price lower. BTC violated the line-in-the-sand support zone between $9000 and $9200 during the latest round of the sell-off, and it remains stuck below that despite the bounce in European trading.

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The short-term MACD is now clearly oversold, almost reaching crash-territory, and long-term investors can once again add to their holdings here, while traders should wait for the short-term trend to turn before entering new positions. Below today’s lows, strong support is found near $7650, while further resistance is ahead at $10,000 and $10,500.

Correlations, which remained elevated throughout the fall, with all of the majors hitting new lows in a concerted fashion, are now breaking down slightly and some coins are showing early signs of relative strength. That said, the declining short-term trends are still intact, and traders should remain defensive in case of most of the top coins.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also still in a clear short-term downtrend following the failure to break-out from the broader bearish trend. Despite the current move, we expect the coin to resume the recovery, and tackle the longer-term downtrend again. Short-term support is now found near $650, with a stronger level at $625, while resistance is ahead near $740 and $780.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin spiked below the $170 support overnight, but it remained relatively strong amid the broad decline, and the coin has also been leading the way higher today. The coin is already on the verge of a short-term buy signal, and as LTC was one of the early leaders of the recovery that bodes well for the rest of the segment too. Resistance is still ahead at $200, between $225 and $235, and at $250, while key support below $170 is at $150.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash continues to trade relatively weak compared to the other majors, as it is trading just above the intraday low, after back in the prior declining trend today. While short-term traders should still stay away from entering new positions, long-term investors could add to their holdings at the current levels. Resistance is now found near $500, $600, and $650, while support is near $435, $400, and $375.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple held up relatively well despite dipping below $0.85 again, and the coin is not far off the crucial level despite the continued selling pressure in the segment. A recovery above resistance would be a bullish short-term signal, but for now, traders should remain defensive here, but investors could still add to their holdings. Resistance is still found at $1, $1.25, and $1.5, while primary support is at $0.68.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

ETC is showing early signs of strength near the $20 level, but for now, bears are firmly in control, and short-term traders shouldn’t open new positions here. The declining short-term trend is clearly dominant, and a test of the $18 level is still possible in the coming days, with further support at $16 and $14.50. A rally above $23 would open up the way to $25 and $27 and long-term investors could once again add to their holdings after the deep correction.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero plunged as low as the $240 support overnight, and the short-term momentum is now in oversold territory, pointing to a possible durable bottom. That said, traders should remain defensive until a confirmed trend change, while investors should also wait with adding to their holdings after the strong recent rally. Key resistance is ahead near $280 and $300, while further support is at $215 and $200.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO hit $80 during the recent leg of the sell-off, and the coin is now oversold from a short-term perspective, with a likely short-term bottom being close. Long-term investors could still add to their holdings here, as we expect the recovery to resume. Support below $80 is at $64, while resistance is ahead at $100, between $120 and $130, just above $150, and at $190.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is stuck below the vital $1.5 level, and the coin was the only one hitting a new low below the February minimum, confirming its relative weakness. Short-term traders should still stay away from opening new positions, despite the clearly oversold momentum, with support levels found at $1.2 and $1.1.

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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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4.6 stars on average, based on 257 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. Cachingman

    March 11, 2018 at 1:06 pm

    I’m looking at the chart for bitcoin of the last 3 months, so zooming out a bit more from the chart shown above. Aren’t we seeing the formation of a double bottom pattern where the trendline is heading for the lows of the beginning of February?
    If so, it would mean a continuation of the pullback in the next week or 2. But that could be a good setup for a major uptrend with strong support afterwards…

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Analysis

Bitcoin Bears Running Out of Gas, According to Price Manipulation Theory

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A group of researchers at The Crypto Fam have linked price manipulation to bitcoin’s bear market, suggesting that the arrival of institutional trading allowed investors to dump oversized holdings of digital currency.

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Bitcoin Price Manipulation?

According to a new theory, it is no coincidence that bitcoin’s long unwind began on Dec. 17, the same day that bitcoin futures were launched. Over the next several months, the bitcoin-dollar exchange rate would fall from a high near $20,000 to a low of $5,980.

The rapid decline was aided by futures trading, which allows traders to short assets much more easily. As we’ve written before, shorting bitcoin was practically impossible prior to the launch of futures.

The theory posits that institutional money was stocking up on bitcoin well before Dec. 17, likely in anticipation of the CBOE/CME futures contracts. The bear market that ensued consisted of three major down moves, with the third leg beginning earlier this month.

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Each down move follows a similar pattern: (1) a fake-out dump, (2) a failed rally and (3) a major dump. Each leg down is driven by lower selling volume with each drop less severe than the previous.

The compelling study was presented this week in a series of tweets by The Crypto Fam, which describes itself as “a community of crypto enthusiasts bridging the gaps.” The group’s stated goal, according to its website, is to “make crypto not so cryptic.”

In describing the pattern, the researchers concluded that “the bear market is running out of gas” because their supply of bitcoin has declined since the pump culminated on Dec. 17.

“This is a very simplified explanation of how markets work. A great deal of the total BTC supply is not traded. Some is lost forever in idle or forgotten wallets. Other Bitcoin is hodled by strong hands who never sell. This gives [market makers] greater power with their share of BTC.”

End of the Downtrend?

With the bears and market makers running low on supplies, the researchers concluded that the end of the downtrend is near. Bounces are more shallow than before while bottoms aren’t nearly as low.

Bitcoin prices fell below $7,300 earlier this week but have since recovered to the $7,500 range. Since bottoming below $6,000, prices have failed to test new lows. On the opposite side of the ledger, rallies have also been limited to $12,000 and $10,000, respectively.

Institutional adoption is widely viewed as a positive development in the evolution of cryptocurrency trading, though the latest study sheds light on the downside risks of derivatives trading. A similar conclusion was drawn earlier this month by the San Francisco Fed, which compared the launch of bitcoin futures to innovations in securitization in the mortgage market. However, this model has been criticized heavily for mistaking correlation with causation.

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 417 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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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

(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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Analysis

Pre-Market: Oil Plunges Below $70 as Markets Mixed Before Long Weekend

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Financial markets are relatively calm today, despite the hectic week that was highlighted by the Turkish currency crisis, wild swings in bonds, and a step back in US-North Korean relations. Stock markets turned lower globally, with US equities outperforming the rest of the world, essentially drifting sideways all week long, thanks to the slight correction in the Dollar’s rally, and the dip in Treasury yields that was triggered by the dovish Fed meeting minutes.

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S&P 500 Futures, 4-Hour Chart Analysis

Today, the durable goods report came out before the opening bell and although the headline number was a tad worse than expected the more important core figure beat the consensus estimate, helping the slightly dampening economic outlook, even as yields continue to fall, especially with regards to long-dated Treasuries.

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EUR/USD, 4-Hour Chart Analysis

Although emerging market currencies are way less volatile today than recently, despite the rebound in the Dollar, equities shed their early gains and are now slightly in the red. The all-important EUR/USD pair hitting yet another 6-month low near 1.1650, and the test of the key long-term 1.1450-1.15 zone looks more and more likely in the coming weeks, even as the pair is a bit oversold.

Energy Markets in Turmoil as OPEC Signals Production Increase Again

WTI Crude Oil, 4-Hour Chart Analysis

It seems that the crude oil market is in for a strategic switch yet again, as the OPEC, together with Russia made it clear today that the price of the Black Gold finally reached a desirable level. The cartel will be targeting a higher level of output later on this year in order to keep the US shale players under pressure by capping the advance in the key commodity’s market.

The WTI contract reached a 4-year high at $72 per barrel recently and the Brent contract which is more exposed to Middle East woes rose as high as $80 per barrel after trading below the $30 level just two years ago. The last phase of the advance extended above the level where a large portion of the shale plays turn profitable, and as global growth worries also surfaced, the commodity entered a selloff this week.

Gold Futures, 4-Hour Chart Analysis

Safe haven assets continue to be bid despite the relatively calm environment, and gold hit a two-week high today despite the bounce in the Greenback as buyers are back after the wash-out plunge below $1300. With the long-term setup and fundamentals still being favorable for the precious metal, the short-term downtrend line is in danger here.

As US markets will be closed on Monday, which usually favors an active session, volatility might remain high throughout the day.

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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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