It’s still a sea of red for bitcoin and its buddies, with some already sliding below key support levels and looking prime for more declines. Any chance of a recovery here?
Bitcoin is down to the last lines of defense as it now tests the bottom of a falling wedge visible on the daily time frame.
However, buyers could still have a chance at spurring a strong bounce as a bullish divergence can be seen. See how price made higher lows while stochastic had lower lows? Or are my groovy shades just deceiving me?
The 100 SMA remains below the longer-term 200 SMA to confirm that bearish pressure is still in play, but the gap between the two is narrowing to signal slowing downside momentum. A bounce from current levels could take bitcoin back to the resistance levels at the 100 SMA dynamic inflection point around $7,200 then the top of the wedge.
Ethereum continues to gain bearish traction as it now moves below a descending trend line on its 1-hour chart. With stochastic heading up, price looks ready for a test of this falling resistance level, which is just below the 100 SMA dynamic inflection point.
The shorter-term moving average is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. In particular, the 61.8% Fib might be enough to keep gains in check near the $300 level.
Litecoin is also cruising below a descending trend line on its 1-hour chart and is in correction mode. Price is already testing the 61.8% Fib and falling resistance, which happens to line up with a former support and the 100 SMA.
Stochastic seems to have a bit of room to climb, though, so buyers might have a bit more energy left to burn before sellers jump back in. Once they do, litecoin might resume the downtrend as the 100 SMA remains safely below the longer-term 200 SMA.
Last but certainly not least is this update on the daily rising channel of Bitcoin Cash versus bitcoin. Price climbed to the resistance area we were eyeing last week and stochastic is suggesting that the ceiling would hold.
If so, BCH could fall back to the channel support or at least until the mid-channel area of interest. A break above the latest highs, on the other hand, could pave the way for a climb to the full extension at 0.20354.
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!