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During a bottoming process, prices swing up and down inside a range. This builds up the internal energy needed to break out or break down from it. Bart Smith, head of digital asset at Susquehanna International Group, said to CNBC that a lot of big investors are waiting for a dip to $5,000 to make an entry into Bitcoin.
Even Bitcoin bear, Todd Colvin, analyst at Ambrosino Brothers believes that “sophisticated investors will step in” at $5,000 on Bitcoin.
The current decline in cryptocurrencies has not deterred a few investors who have held their bullish targets. One of them is Tom Lee, co-founder and head of research at Fundstrat Global Advisors, who has a target of $25,000 for Bitcoin by the end of this year.
Another Bitcoin bull is Julian Hosp, president and co-founder of crypto wallet startup TenX who has a target of $60,000 by year end 2018.
We are similarly bullish on cryptocurrencies and believe that they are undergoing a base building process, however, our targets are much more muted. Long-term investors should use sharp falls to add the major coins to their portfolio. So, let’s see which are the ones that can be purchased now.
Bitcoin turned down from the overhead resistance of $6,953.38 on July 9 and slipped below the 20-day EMA. If the current fall is stopped above the $6,250 mark, the probability of an inverse head and shoulders pattern forming will increase.
The bullish setup will complete on a breakout and close above $6,953.38. The pattern target of such a break out is $7,996.11.
Once the BTC/USD pair breaks out of the downtrend line, it will become positive and might climb to $8,560 and thereafter to $10,000.
Conversely, if the bulls fail to hold $6,250, a fall to $6,075 is probable. Below $5,900, the next support is at $5,450, hence, the stops for the long positions initiated at $6,650 should be kept at $5,900.
The bulls could not push prices higher after breaking out of the 20-day EMA on July 7. The failure of Ethereum to move up attracted selling, which resulted in a breakdown of the 20-day EMA and the support at $450.1.
The next support on the downside is at $404.99. If this level also breaks, the ETH/USD pair can slump to the critical support at $358.
The cryptocurrency will become positive if it scales above $500. We shall wait for the breakout before suggesting any trades.
Ripple is in a firm bear grip. It has again broken below $0.45351. Its next support is at $0.4242. If this level breaks, there is no major support until $0.24001.
On the upside, the 20-day EMA will continue to act as a stiff resistance. Above this level, the next resistance is at $0.52.
The XRP/USD pair will show signs of a turnaround once it sustains above $0.56. Until then, all pullbacks will be sold into.
We shall wait for the trend to change before proposing any trades on it.
Bitcoin Cash has turned down after failing to break out of the 20-day EMA. It is currently taking support close to the $700 levels. If this level breaks, the cryptocurrency can slide to $657.8 and below that to $619.7510.
On the upside, the BCH/USD pair will gain strength above the 20-day EMA. However, we shall turn positive only after the bulls sustain above $850 for 4 hours.
As this pair has a history of vertical rallies, we shall recommend a long position on any indication of a trend change.
We were expecting the tight range on EOS to resolve on the upside, but our assumption has been proven wrong. The bears forced a breakdown of the range, which led to a sharp fall that has carried the digital currency to the critical support at $6.8926.
If the EOS/USD pair sustains below $6.89, it can slide to $5.961. If this level also breaks, the next support is at $5.1801.
On the upside, the digital currency will gain strength if it breaks out and sustains above the 20-day EMA and the downtrend line. We shall suggest a long position once it scales above $9.5.
Litecoin re-entered the descending channel on July 8 and dropped to an intraday low of $76.450 on July 10. This shows that the digital currency is vulnerable to a deeper fall if it breaks below $74.
Our bearish view on the LTC/USD pair will be invalidated in the short term if the bulls scale above $92. However, we believe that the zone between $102 – $107 will offer a stiff resistance on the upside.
We shall wait for a buy setup to form before suggesting any long positions on the pair.
After the bulls failed to scale above the 20-day EMA on Cardano for seven days, it’s now the turn of bears to try and break below the support zone of $0.111843 – $0.13. If the bears succeed, the coin can plunge to the next support at $0.0782.