After the recent correction, a significant reduction in volume has tamed volatility in the crypto markets. Most coins appear staggered with limited action, but this could be build up to a major move. This technical analysis will evaluate where Ethereum , XRP , and Litecoin could be headed.
Over two weeks ago, Ethereum broke below the 7-week moving average followed by a significant correction down to the 50-week moving average sitting around $190. It appears the 50-week moving average is now acting as support, preventing the price of ETH from a further drop. Watching whether this support holds or breaks will be critical.
Based on the 1-week chart, a move above the 7-week moving average could signal a continuation of the bullish trend. But, a move below the 50 and 30-week moving average would indicate a further decline.
On the 1-day chart, it is clear that after reaching a high of $363.30 on June 26, Ethereum has gone down to its 61.8 percent Fibonacci retracement level—which is considered the ‘golden’ retracement area.
This Fibonacci retracement level represent a pivotal point for ETH’s trend. Usually, a pullback to this zone is an indication of an exhaustion point. A correction, like the one just experienced, to these levels suggests a rebound. However, a break below the golden retracement level is a signal of trend reversal from bullish to bearish, once again.
The Bollinger bands on the 12-hour chart could help clarify what will happen next. Under this timeframe, the Bollinger bands are squeezing which indicates Ethereum has entered a consolidation phase. Squeezes are typically followed by periods of high volatility. The longer the squeeze the higher the probability of a strong breakout. Thus, the range between $199 and $235 is a reasonable no-trade zone.
A break above $235 could lead to an upswing to the 38.2 percent Fibonacci retracement level. Meanwhile, a break below $199 could take ETH to retest the support given by the 61.8 percent Fibonacci retracement level. If that support fails the crypto could fall to the 78.6 percent Fibonacci retracement level.
XRP has been limping. The majority Ripple –owned cryptocurrency has experienced weak price action compared to the other top five cryptocurrencies. While Bitcoin rose 326 percent since mid-December 2018, XRP only went up 77 percent. Recently, the crypto even dropped back to $0.30, which is the same price price it was trading at from the end of last year.
According to Ripple’s quarterly report , XRP’s global trading volume dropped 28 percent from $595 million to $429.5 million since Q1. This could be one of the reasons XRP’s volatility has been low: lack of trading volume.
Despite the lackluster YTD price movement XRP, it’s reasonable to expect that a breakout will happen. Based on the 1-week chart, a triple bottom might be the right signal.
According to Investopedia , this is a bullish technical formation that indicates that there is strong support around the $0.30 level and bears may capitulate when the price breaks through the $0.38 and $0.47 resistance levels, usually resulting in eye-catching gains from liquidated shorts.
Nonetheless, different technical analysts, such as Tone Vays , tend to see triple bottoms as a bearish formations. They believe that the more times a support level is tested the weaker it becomes, and the higher the probability that it will break.
Now that XRP has tested the $0.30 support level for the third time, it could actually be a sign that it will soon break below it and reach $0.16, as 40-years trading veteran Peter Brandt pointed out. It would be wise to remain out of XRP until it has broken above resistance or below support.
— Peter Brandt (@PeterLBrandt) July 11, 2019
Litecoin’s market valuation plummeted nearly 50 percent from its high of $147 on June 22. It then rebounded quickly to find support around $93.5. Notably, it seems like the $93.5 support level has been holding the price of LTC from a further decline for the last 3 weeks. It remains to be seen if it will continue to do so.
Levels on the 1-week chart show that there are price points acting as barriers to LTC price movement. If this cryptocurrency continues declining it will find support around $70, $57, or $47.5. If volume starts picking up and the bullish trend resumes then Litecoin could find resistance around $115, $145, or $173.
For additional clues for where Litecoin is heading, we take a look at the 3-day chart.
Recently, the TD Sequential Indicator presented a bullish signal in the form of a red nine, indicating that the bullish trend could resume. And now, there is a green one candlestick. The bullish signal will be confirmed if the next candlestick is a green two candlestick trading above current green one, which could have the potential to take LTC up to test the resistance levels previously mentioned.
The bullish signal given by the TD Sequential Indicator will be invalidated if a candlestick closes and another opens below $87, which would signal a continuation of the correction.
Breaking below $87 will signal a retest of the 200-day moving average on the 1-day chart, which would align with what happened in 2015 after the first Litecoin halving (a fixed event that occurs every four years after 840,000 blocks are mined, which reduces the mining reward by 50 percent). At the moment, it seems like history is repeating itself because LTC seems to be mimicking its behavior from 2015, so a break below the $87 may happen again (which was previously followed by a long consolidation period).
Currently, it seems like all the cryptocurrencies analyzed are consolidating after the recent correction. Most of these coins are sitting in no-trade zones with no clear indication of whether support or resistance will break first.
Although most of the cryptocurrencies in the market look bullish based on the 1-month charts, Peter Brandt warned of a possible 80 percent doomsday correction to the total market capitalization, mainly impact altcoins.
While the parabola in BTC was subject to different renderings, the parabola in the total market cap chart was loud and clear. Total cap should correct 80%. Most of the damage of decline will occur to altcoins. pic.twitter.com/DssCIL4H0R
— Peter Brandt (@PeterLBrandt) July 16, 2019
If such a scenario where to occur, the losses would be catastrophic for altcoin holders. Although most traders are not that pessimistic, with such high levels of uncertainty in the market,waiting for confirmation with a clear break of the trend seems to be the best course of action.
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