Bitcoin (BTC) and most major cryptocurrencies have entered a consolidation period and a decisive breakout or breakdown from it is now to be expected.
As the year comes to an end, the focus will shift to the major events that are expected to influence crypto prices next year. China’s launch of a digital yuan is one such event that can influence crypto prices. The People’s Bank of China’s deputy director Mu Changchun said that the digital form of yuan would not have any room to speculate on its value as it would be different from Bitcoin and stablecoins.
Though China has been against cryptocurrencies, it has been making major strides in supporting blockchain technology. The Central Bank of China has used blockchain technology to issue 20 billion Chinese yuan ($2.8 billion) of special bonds. These bonds will fund a small portion of the bank’s loan portfolio issued to small businesses.
Daily cryptocurrency market performance. Source: Coin360
The Shenzhen Stock Exchange has launched an index that will track the performance of stocks of 50 companies involved with the blockchain industry. Lu Lei, deputy head of the State Administration of Foreign Exchange said that the government “will push forward a prospective study on foreign exchange reforms to deal with cryptocurrency and explore the construction of the foreign exchange regulation and technology system under the new situation.”
While China is getting heavily involved with blockchain technology, Japanese companies are attempting to boost crypto adoption. Japanese retail giant Rakuten will allow its customers to convert their Rakuten Group loyalty points to three different cryptocurrencies, Bitcoin, Ether and Bitcoin Cash.
With the fundamentals likely to improve next year, should the investors buy at current levels or do the technicals project a deeper correction? Let’s find out.
Bitcoin (BTC) turned down from the overhead resistance at $7,856.76 on Dec. 23. This shows that bears are aggressively defending the resistance levels. The immediate support on the downside is $7,000. If this level cracks, a drop to $6,435 is possible. We expect the bulls to defend this support but if it gives way, the sentiment will turn extremely negative.
BTC USD daily chart. Source: Tradingview
The 20-day EMA is flat and the RSI is just below 50, which points to a range-bound action for the next few days. If the BTC/USD pair bounces off $7,000, it will be a positive sign as it will indicate that bulls are not waiting for a deeper correction to buy. If the pair consolidates between $7,000 and $7,856.76, it will increase the probability of a breakout out of this tight range.
We anticipate a change in trend after the bulls breakout and close (UTC time) the price above $7,856.76. Therefore, we retain the buy proposed in our previous analysis.
Ether (ETH) turned down from the 20-day EMA and broke below the immediate support at $125. Both moving averages are sloping down and the RSI is close to oversold territory, which suggests that bears are in command.
ETH USD daily chart. Source: Tradingview
The next stop is likely to be $117.09. If this level also cracks, the downtrend will resume. The next target to watch on the downside is $100.
Conversely, if the bulls defend the support at $117.09, a few days of range-bound action is likely. We will wait for the ETH/USD pair to break out of the 20-day EMA before turning positive.
The failure of the bulls to push XRP above $0.20041 has attracted profit booking. The bears will now attempt to sink the price to the recent low of $0.17468. A breakdown of this support will be a huge negative as it will resume the downtrend.
XRP USD daily chart. Source: Tradingview
With both moving averages sloping down and RSI in the negative territory, the advantage is with the bears.
Nonetheless, if the bulls defend the support at $0.17468, the XRP/USD pair might remain range-bound for a few days. The first sign of strength will be a breakout and close (UTC time) above the overhead resistance at $0.20041. Until then, we suggest traders remain on the sidelines.
Bitcoin Cash (BCH) turned down from the 20-day EMA on Dec. 23. The bears are attempting to sink the price below the immediate support at $183.40. If successful, a retest of $169.62 is possible. Both moving averages are sloping down and the RSI is in the negative zone, which indicates that bears have the upper hand.
BCH USD daily chart. Source: Tradingview
However, if the bulls defend the support at $183.40, the BCH/USD pair will make another attempt to break out of the channel and the overhead resistance at $203.36. Above this level, a move to $227.01 is possible. We will turn positive above $203.36. Until then, we suggest traders remain on the sidelines.
Litecoin (LTC) turned down from the resistance line of the descending channel on Dec. 23. There is a minor support at $39.252. If this support holds, the bulls will make another attempt to scale above the channel and the overhead resistance at $42.0599.
If successful, a rally to $50 is possible. Hence, we retain the buy recommendation given in the previous analysis.
LTC USD daily chart. Source: Tradingview
Conversely, if bears sink the LTC/USD pair below $39.252, a retest of the recent low at $35.8582 is possible. If this support also cracks, a drop to the support line of the channel at $33 is likely. A break below the channel will be a huge negative.
EOS failed to rise and close (UTC time) above $2.5804 for the past two days. However, we like that the price has not given up much ground, which is a positive sign. The bulls are likely to attempt a breakout of $2.5804 within the next few days.
EOS USD daily chart. Source: Tradingview
If the bulls can sustain the price above $2.5804, a rally to $2.8695 is likely. The 50-day SMA is placed just below $2.8695, hence, we anticipate the bears to defend this level aggressively. The short-term traders can participate in this move by initiating long positions as suggested in our previous analysis.
Contrary to our assumption, if the bears sink the price below $2.4001, a retest of $2.1624 will be on the cards.
The bulls could not extend the relief rally above the $13.88 to $14.2555 overhead resistance zone. This is a negative sign as it shows that the bulls are in no hurry to accumulate Binance Coin (BNB) at higher levels.
BNB USD daily chart. Source: Tradingview
If the bulls can keep the price above $12.9624 it will indicate strength and increase the possibility of a break above $14.2555. Above this level, a rally to $16.50 is likely. The short-term traders can ride this up move as recommended in our previous analysis.
However, if the BNB/USD pair slips and sustains below $12.9624, a retest of the recent low at $12.1111 is possible. A breakdown of this support will be a huge negative.
Though Bitcoin SV (BSV) scaled above the downtrend line, the bulls could not build on the strength and push the price above the overhead resistance at $92.693. This shows that buying dries up at higher levels.
BSV USD daily chart. Source: Tradingview
The price might now consolidate between $78.506 and $92.693 for a few more days. A break below this range can sink the BSV/USD pair to $66.666.
Conversely, if the bulls can propel the price above $92.693, a move to $113.96 is possible. Therefore, we retain the buy suggested in our previous analysis.
The intraday range has been shrinking for the past few days. Usually, such tightening of the range is followed by range expansion. If Tezos (XTZ) moves up sharply, supported by higher volume, a rally to $1.65 is possible. Such a move will indicate a resumption of buying by the bulls.
XTZ USD daily chart. Source: Tradingview
Conversely, if the range expands to the downside and breaks below the 50-day SMA, a retest of $1.18 will be on the cards. A break below this level can drag the price to $1.10 and below it to $0.829651.
The 20-day EMA has flattened out and the RSI is close to the center, which points to a range formation in the near term. Though we are positive on the XTZ/USD pair, we will wait for the bulls to assert their supremacy before proposing a trade in it.
TRON (TRX) has again slipped back below the 20-day EMA, which is a negative sign. It shows that bears are active at higher levels. They will now attempt to sink the price to the recent low of $0.0120843, below which a retest of the critical level at $0.01124 is possible. If the bears sink the price below $0.01124, it will be a huge negative.
TRX USD daily chart. Source: Tradingview
However, if the TRX/USD pair turns around from the current level, the bulls will again attempt to push the price above the descending channel pattern. If successful, the up move might again hit a barrier at the 50-day SMA and above it at $0.0163957.
A breakout of $0.0163957 will indicate a probable change in trend that can carry the price to $0.020 and above $0.02340. We will turn positive on a breakout above $0.0163957.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.