A deeper correction may have to wait as many major cryptocurrencies are looking strong and their uptrend is likely to continue.
Interest in Bitcoin (BTC) has surged significantly after its rally above $10,000 and if the bulls can sustain the price above this psychological level, it is likely to attract further attention. While it is difficult to pinpoint the exact reason for this resurgence, a host of factors such as the China coronavirus scare, the upcoming Bitcoin halving, discussion of launching a central bank digital currency by various countries, and the increased institutional adoption of cryptocurrency might all be contributing to the rally.
An important highlight of the crypto rally in 2020 is that it has been broad-based. Several major altcoins have made a sharp comeback, which shows wider participation by investors. Barring a few altcoins, the rise in most major cryptocurrencies has been gradual. Such uptrends usually tend to sustain for a long period. Therefore, when a the trend is firmly established, traders should look to buy on every dip.
Daily cryptocurrency market performance. Source: Coin360
However, every up move has its share of shakeouts. In every bull phase, there are periodic sharp corrections that scare the weaker hands and attract the investors with greater conviction. Here too, we expect a few sharp falls that will test the investors’ patience. We will try to spot these beforehand to the best of our ability so that traders can position themselves accordingly.
Let’s analyze the charts of the major cryptocurrencies to see if the uptrend can continue for a few more days or whether a pullback around the corner.
BTC/USD
After failing to sustain above the overhead resistance at $10,360.89, Bitcoin (BTC) has dipped back below it. However, the positive thing is that the bulls have not given up much ground, which shows that the investors expect the uptrend to resume.
BTC USD daily chart. Source: Tradingview
Both moving averages are sloping up and the RSI is close to the overbought zone, which shows that bulls have the upper hand.
The price might dip to the 20-day EMA, which is likely to act as a strong support. A strong bounce off the 20-day EMA will increase the possibility of a move above $10,360.89. If successful, the BTC/USD pair might gradually move up to the downtrend line, which is at $11,500.
However, it is unlikely to be an easy ride up for the bulls because we anticipate the bears to mount a stiff resistance in the $10,360.89 to $11,000 zone.
Contrary to our assumption, if the bears sink the price below the 20-day EMA, the sentiment will turn negative. A deeper correction will be signaled if the price dips below the recent support at $9,097.15. Therefore, the traders can keep the stop loss on the remaining long positions at $8,900.
ETH/USD
Ether (ETH) remains in a strong uptrend. It had been trading close to the $265 levels for the past two days. This shows that even after the recent sharp rally, the traders are not booking profits on their positions.
ETH USD daily chart. Source: Tradingview
If the price consolidates close to the current levels for a few days, the uptrend is likely to resume. The next target objective is $289.221 and above it $318.238. If the momentum remains strong, the rally can even extend to $366.
However, we remain cautious in the short-term as the RSI is deep in the overbought territory. If the next dip bounces off the recent breakout level of $235.70, the bulls will attempt to resume the up move.
Our bullish view will be invalidated if the ETH/USD pair dips and sustains below the breakout level of $237.70. The traders can keep the stops on the remaining long positions at $210. We shall suggest trailing the stops higher after the price sustains above $289.221.
XRP/USD
XRP broke above the overhead resistance at $0.31503 on Feb. 13, which completed the rounding bottom pattern. This setup has a target objective of $0.45538. Currently, the bulls are attempting to defend the overhead resistance at $0.34229.
XRP USD daily chart. Source: Tradingview
If the bulls can push the price above $0.34229, the up move will resume. Above this level, the next target to watch out for is $0.40.
However, if the bears sink the price back below $0.31503, the XRP/USD pair can dip to the 20-day EMA at $0.274. A bounce off this level will increase the possibility of a break above $0.34229.
Conversely, if the bears sink the price below the 20-day EMA, a deeper correction is likely. For now, the stops on the long positions can be retained at $0.26. The stops can be trailed higher after the pair sustains above $0.34229.
BCH/USD
Bitcoin Cash (BCH) is nearing the psychological resistance at $500. We expect the rally to face stiff resistance in the $500-$515 zone. However, if the momentum can push the price above this zone, a move to the resistance line of the ascending channel at $550 is possible.
BCH USD daily chart. Source: Tradingview
The recent up move has pushed the RSI deep into the overbought territory, which suggests that the rally is overextended in the short-term.
If the BCH/USD pair turns down from the current levels or from the overhead resistance zone, it can dip to the support line of the channel. A breakdown below the channel will turn the tide in favor of the bears.
BSV/USD
Bitcoin SV (BSV) has pulled back to the breakout level of $337.80. We anticipate the bulls to defend this level aggressively. If the price sharply bounces off $337.80, it will once again attempt to resume the uptrend towards the lifetime highs.
BSV USD daily chart. Source: Tradingview
However, if the bears sink the BSV/USD pair below $337.80, a drop to the 20-day EMA at $316 is possible. If the price bounces off the 20-day EMA, the bulls will once again attempt to resume the up move.
Conversely, a break below the 20-day EMA can drag the price back towards the critical support at $236.
LTC/USD
The bears are trying to defend the $80.2731 levels but they have not been able to sink Litecoin (LTC) to the next support at the 20-day EMA. This is a positive sign as it shows a lack of sellers at these levels.
LTC USD daily chart. Source: Tradingview
If the bulls can sustain the price above $85, the LTC/USD pair can move up to its target objective of $96.439.
Conversely, if the bears sink the price below $80.2731, a drop to the 20-day EMA at $71.68 is possible. A bounce off this support will keep the uptrend intact. However, if this support cracks, a drop to $66.1486 is possible.
EOS/USD
EOS has been facing resistance near $5.5 levels. However, the bulls have not given up much ground, which shows buying even on minor dips. A break above $5.5 can push the price to the $6-$6.4 zone where we expect the bears to mount a stiff resistance.
EOS USD daily chart. Source: Tradingview
If the momentum can carry the EOS/USD pair above the overhead resistance zone, the uptrend can extend to $7.60.
However, the sharp up move of the past few days has pushed the RSI deep into the overbought territory. This points to a possible consolidation or a minor correction in the next few days.
The first support to watch on the downside is $4.8719 and below it the 20-day EMA at $4.61. If this support holds, the bulls will again attempt to resume the up move. Our bullish view will be invalidated if the bears sink the price below $4.24.
BNB/USD
Binance Coin (BNB) turned down from $27.1905 on Feb. 13. The bears will now try to drag the price to the support at $23.5213. If the price bounces off this support, the bulls will attempt to resume the up move.
BNB USD daily chart. Source: Tradingview
The first target on the upside is $29 and above it $32. We expect the bears to defend the $32 level aggressively.
Contrary to our assumption, if the BNB/USD pair loses ground and dips below the support at $23.5213, it can drop to $21.80. A breakdown below this level will signal a deeper correction. Therefore, the traders can protect their long positions with stops at $21. The stops can be trailed higher after the price scales above $29.
XTZ/USD
Tezos (XTZ) dipped to $2.9191 on Feb. 13 after reaching a high of $3.5989 on Feb. 12. However, the pullback was short-lived as the bulls have aggressively purchased the one-day fall. This shows that the bulls are buying on minor dips instead of waiting for a deeper fall.
XTZ USD daily chart. Source: Tradingview
The bears could not even sink the price to $2.7809234, which corresponds to the 38.2% Fibonacci retracement level of the most recent leg of the rally. This shows that the sentiment is hugely bullish.
If the bulls can push and sustain the XTZ/USD pair above $3.5989, the rally can extend to $4.8 with a minor resistance at $3.86. It is difficult to call a top when an asset is backed by strong momentum. However, when the rally gets vertical, the traders should keep trailing the stops higher because the risk of a deeper pullback increases exponentially.
ADA/USD
Cardano (ADA) remains in a strong up move. However, the deeply overbought reading on the RSI suggests that the rally has run ahead of itself in the short-term. Therefore, a few days of consolidation or a minor correction is possible.
ADA USD daily chart. Source: Tradingview
The previous resistance of $0.065229 will now act as a support on any pullback. If the price bounces off this level, the bulls will try to resume the up move. The target objective on the upside is $0.08 and above it to $0.10.
However, if the bears drag the price below $0.065229, the ADA/USD pair can drop to the 20-day EMA at $0.0588, which is again likely to act as a strong support. The trend will weaken on a break below $0.0560221. The traders can protect their paper profits on the remaining long positions with a stop loss at $0.06.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of CryptoX. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
