China has banned ICOs and has ended cryptocurrency trading opportunities on the Chinese exchanges. However, it is moving ahead with steps to study the Blockchain technology in detail to issue its own digital currency.
Beijing should “accelerate the process of launching a sovereign digital currency after it curbed risks of cryptocurrencies,” said an opinion piece published in the Financial News, the mouthpiece of the People’s Bank of China(PBOC).
However, with credit rating agencies recently downgrading China’s sovereign rating, it is unlikely that a digital currency issued by the PBOC will displace Bitcoin or Ethereum.
Bitcoin has been trading in a small range for the past two days. It is facing resistance at the 3,800 levels. Today, even if the digital currency breaks out of the downtrend line, it is unlikely to race away towards the highs. It will face resistance from the 20-day exponential moving average (EMA) at $3,886.
Thereafter, the next resistance zone is between $4,050 and $4,120 levels. Unless Bitcoin breaks out of this, it is likely to remain range-bound and volatile. Nevertheless, a breakout of the downtrend line will change the trend from down to range bound.
On the downside, the digital currency has a strong support at $3,500 levels. A breakdown of this level can push the cryptocurrency back towards the lows of $2,974.
Currently, we don’t find a buy setup with a good risk to reward ratio. Nevertheless, aggressive traders can look for buying opportunities once Bitcoin breaks out and closes above the downtrend line. The initial stop loss can be kept at 3,500, which can be raised later. The position size shouldn’t be more than 25 percent of the normal.
If Bitcoin gains momentum, additional positions can be added above $4,120 levels. The first target objective on the upside is $4,680, above which a retest of the lifetime highs is likely.
Ethereum is attempting to move higher. It has broken out of the downtrend line and the 20-day EMA. It has also formed an ascending triangle pattern, which will complete on a breakout and close above $311. The pattern target on a breakout of the triangle is $420.
However, the digital currency will have to sustain above the uptrend line to keep the formation intact. If Ethereum breaks below the uptrend line, it will invalidate the pattern, sinking the digital currency to $235 levels.
We don’t find any trade as long as the cryptocurrency trades inside the triangle.
We recommend a long position on a breakout and close above $312, SL $260 and target $420. Traders should enter long positions only on a confirmed close above the overhead resistance. $344 might act as a resistance; however, we expect this level to be crossed.
Bitcoin Cash firmly remains below the downtrend line. It hasn’t done much in the past four days. $400 has acted as a strong support, however, lack of buying at higher levels has resulted in small range days.
As Bitcoin Cash is not showing any trend, we don’t have a recommendation on it. We shall consider it only after it sustains above the downtrend line for three days or breaks out of $550.
Ripple is not showing any trend. It is stuck in a tight range between $0.15000 and $0.19300. We don’t find any trade within this range.
If ripple breaks out of $0.20000, aggressive traders can initiate long positions with a target objective of $0.25000. The stop loss for this trade can be kept at $0.15000. Nevertheless, please don’t allocate more than 25 percent of the usual position size on this trade, because it is a low conviction setup.
On the lower side, $0.15000 and $0.13500 are the two critical supports to watch out for.
Litecoin has held the critical support of $45. However, it is struggling to move higher.
It is likely to break out of the downtrend line. However, it will not become positive until it breaks out of the $60 levels.
It is likely to remain range-bound between $45 and $57 for the next few days. Therefore, we are not recommending a trade on it. Critical levels to watch out are $60 on the upside and $45 on the downside.