Technical Views on Cryptocurrencies
25th Feb 2019
Exhibit 1: Daily Chart of BTC
Bitcoin (CMP: $3879)
Primary Trend: Down
Secondary Trend: Choppy
Minor Trend: Up
Bitcoin has seen a prolonged downtrend and in fact, it has seen its value depreciating over 80% since December ’17 top. In this process, its volatility has also shrunk and so is the volume. For approximately past three months since late November 2018, Bitcoin has actually been trapped within a range of $4200 and $3300 & it makes the intermediate trend neutral which is definitely a welcome relief for the sagging bulls in this premium crypto pair.
Longer is this consolidation, stronger will be the subsequent break out. Towards closing of the last week, we saw another significant sell-off in BTC from exactly the same resistance area of $4200 zone which re-affirms the strength of this supply zone. We suspect many bulls are trapped at $4000-$4200 regions in this scrip & they will try to take their exit whenever prices present them an opportunity to exit at break even, thus creating a supply/resistance zone. Going forward, as long as prices maintain within this range, traders are advised to fade the breakouts in either extreme of the range till the point the breakout actually materialises, following which a trend-following strategy ought to be adopted.
Exhibit 2: BCH daily chart along with 20 day Envelop & 10, 15, 20 day KST
Bitcoin Cash (CMP: $131.7)
Primary Trend: Down
Secondary Trend: Down
Minor Trend: Up
Bitcoin cash has also seen a huge 90% erosion of its value since 2017 top. Prices are to some extent trying to create a bottom, but a quick glance into Exhibit 2, the daily chart of BCH shows that it has not been as resilient to selling as Bitcoin.
Width of the 20-day envelop has been narrowed down, which testifies for a shrinking volatility. KST have also turned up & slope of the moving averages are upward, suggesting some sort of recovery taking place in this battered counter. However, the main difference between BTC & BCH stands out in the fact that while Bitcoin has been challenging its December top, Bitcoin cash has fallen well short of that mark. So, the relative strength of Bitcoin cash is not as strong as Bitcoin itself and consequently, in case the Crypto-currencies fail to take out said high of 2018, BCH could present a better shorting opportunity than many other pairs.
Exhibit 3: LTC daily Chart with 200 Day Average & MACD
Litecoin (CMP: $46.9)
Primary Trend: Up
Secondary Trend: Up
Minor Trend: Up
In the present scenario, LTC presents one of the strongest charts in the crypto world and bulls should be enthused with certain developments here.
It witnessed an equal depreciation in the past 15 months, just like other crypto pairs, but in recent periods LTC has developed signs of strong recovery & that has happened in spite of the recent sell-off late last week. Speaking technically, Litecoin has taken out its 200-day average quite convincingly, as evident from its daily chart in Exhibit 3. Secondly, the series of lower tops (classical downtrend patterns) have been replaced by series of higher bottoms (classical uptrend patterns) and finally, the MACD has also entered into positive territories and went ahead to register a new high not seen in many months in recent past. All these developments are quite evident in the daily chart of Litecoin as shown in Exhibit 3. These facts translate into the conclusion that going forward, we expect LTC to continue its out performance in short to intermediate term & prices are likely to go higher.
