Cryptocurrency bulls might have another shot at redemption as some buying pressure appears to be returning this week.
Can these gains be sustained?
Bitcoin did find support at that long-term triangle bottom we were watching closely last week then managed to break above a short-term triangle pattern.
This signals that bulls are out to play, especially with that tiny flag pattern seen on the 4-hour time frame. However, buyers have plenty of upside barriers to break before confirming that an uptrend is underway.
In particular, the 61.8% Fibonacci retracement level could contain several limit orders as it lines up with the top of the descending channel, a former support zone, and the 100 SMA. Note that this moving average is still below the longer-term 200 SMA while stochastic is closing in on overbought territory.
Ethereum appears to have finally broken above the inverse head and shoulders neckline from the other week and is establishing a fresh uptrend channel on the short-term time frames.
Price is hitting resistance, though, and could be due for a correction to support in order to gather more bullish energy. Applying the Fib tool shows that the 61.8% level lines up with the bottom of the channel while the 50% Fib coincides with an area of interest.
It’s also helpful for bulls to note that the 100 SMA just crossed above the longer-term 200 SMA to hint that there’s a good chance this uptrend could carry on.
Litecoin is also slowly getting back on its feet and starting to create a rising channel on its 1-hour time frame. Price is currently stuck at the mid-channel area of interest, still deciding whether to head straight for the top or make another pullback.
The 100 SMA is still below the longer-term 200 SMA on this chart, which suggests that the path of least resistance is to the downside. In other words, a test of the channel bottom could still take place.
Then again, the gap is narrowing to show that bearish momentum is slowing and that an upward crossover may be in the cards. At the same time, stochastic appears to be pulling higher to reflect a return in bullish pressure.
IOTA is still in a weak spot as it was unable to join the rest of its peers in making a strong bounce earlier on. The moving averages also failed to complete a bullish crossover, reinforcing the presence of sellers.
Price seems to be setting its sights on the key support at the 1.00 major psychological level, which held in March and April this year. However, stochastic is turning back down without hitting overbought levels to show that a downside break is possible.
Ripple seems to be done with its drop as price failed in its last couple of attempts to move below the .5100 mark. This created a small double bottom formation and a test of the neckline looks ready to happen.
The 100 SMA is still below the longer-term 200 SMA to signal that resistance is more likely to hold than to break. However, stochastic appears to be turning higher, suggesting that buyers could regain the upper hand.
A move past the neckline could lead to a rally of the same height as the chart formation, which spans .5100 to .5600. On the other hand, another bounce could take it back down to the bottoms or lower.
A bit of fair warning, though. There is a considerable amount of risk in trading cryptocurrencies due to their inherent volatility and sensitivity to headlines. Be careful out there!