The US Federal Reserve is at it again. For the second time this month, the Fed has done an emergency rate cut. On March 3, a 50 basis point cut was implemented and that was followed with a 100 bps cut on March 15. If that was not enough, the Fed also announced a $700 billion quantitative easing program. Surprisingly, in response to this, equities markets reacted by dropping over 11%.
This shows that the markets are signaling to the Fed that rate cuts are not the solution for every problem at hand. After a few months when the coronavirus pandemic is brought under control, all this excess liquidity being pumped into the system will become a huge headache.
Daily cryptocurrency market performance. Source: Coin360
The initial reaction to this news was positive for cryptocurrencies as the total market capitalization surged from about $147.8 billion to $165.8 billion within minutes. However, the enthusiasm could not sustain and cryptocurrencies again succumbed to selling pressure and the market cap dropped to a low of $127.2 billion.
However, buyers again emerged at lower levels, which is a positive sign as it shows that investors are accumulating on dips. At press time, the market cap had risen to $142.5 billion.
These are unprecedented times where news events will continue to dictate price action and volatility is likely to remain high. Let’s analyze the charts to spot the levels which will signal a possible trend reversal.
The relief rally in Bitcoin (BTC) stalled just below $6,000 on March 13 and 15. This shows that bears continue to aggressively sell on any minor rallies. Currently, the bears are again attempting to resume the down move.
If the bears can sustain the price below $4,400, a retest of the recent lows at $3,803.58 is possible. The downsloping 20-day EMA and the RSI in the oversold zone suggest that bears are in command.
However, if the bulls again buy the dips below $5,000, the BTC/USD pair might attempt a bounce back to $6,000. A few days of range-bound action between these two levels cannot be ruled out.
We continue to look for buying opportunities but will wait for a reliable buy setup to form before recommending a trade in it.
Though Ether (ETH) stayed above $117.090 for three days, the bulls could not build on the strength and push the price to $155.612. This shows a lack of buyers at higher levels. Currently, the bears have resumed their selling and the biggest altcoin has dipped below $117.090 once again.
ETH USD daily chart. Source: Tradingview
The bears will try to sink the ETH/USD pair below the strong support at $84.25. If successful, the downtrend will resume and the next major support is at $50.
However, if the buyers step in and buy the current dip, it will show demand at lower levels. If the pair bounces off $100 or the support at $84.25, the bulls will once again attempt a relief rally. The levels to watch on the upside are $139.386 and above it $155.612. We will wait for a trend reversal to be signaled before turning positive.
The bulls could not propel XRP above the overhead resistance at $0.17468 in the past three days. This shows that the bears continue to aggressively defend the resistance levels. The failure to move up has attracted sellers.
XRP USD daily chart. Source: Tradingview
Currently, the bears are attempting to resume the down move but the bulls are trying to keep the XRP/USD pair inside the descending channel.
If the bears succeed in breaking below the channel, a retest of the recent lows at $0.1140 is possible. If this support cracks, the downtrend can exceed to $0.10 and below that $0.075.
Conversely, if the pair stays inside the channel, a move to $0.17468 is likely. If the price turns down from this level once again, a few days of range-bound action is possible. However, if the bulls can push the price above $0.17468, a rally to the 20-day EMA at $0.20 is likely. We will wait for the pair to sustain above the descending channel before turning positive.
Bitcoin Cash (BCH) has been trading around the $169.62 mark for the past three days. Though the price had surged on March 13, the bulls could not sustain the rally. This shows a lack of sustained buying at higher levels.
BCH USD daily chart. Source: Tradingview
Today, though the bears attempted to sink the BCH/USD pair below the recent low of $141.11, the bulls stepped in and purchased at lower levels.
This is a positive sign as the pair has again risen to about $169.62 levels. If the bulls can sustain the price above $200, a rally to the 20-day EMA at $264 is possible. On the other hand, if the bears can sink the pair below $141.11, a drop to the next support at $105 is possible.
The rebound off the lows at $82.771 could only reach a high of $131.460 on March 15. Currently, the bears are attempting to resume the down move. If Bitcoin SV (BSV) breaks below the $82.771-$78.506 support, the downtrend will resume.
BSV USD daily chart. Source: Tradingview
Below $78.506, the next level to watch is $66.666 and if that also fails to provide support, the decline can extend to $50.
Conversely, if the BSV/USD pair bounces off $82.771, a few days of range-bound action is possible. We will wait for the price to break above the 200-day SMA and the descending channel before turning positive.
The pullback in Litecoin (LTC) from the lows at $23.9777 stalled at the overhead resistance zone of $35.8582-$38.8015. This shows that the bears continue to aggressively defend the resistance levels.
LTC USD daily chart. Source: Tradingview
Currently, the bears are again attempting to resume the downtrend. If the LTC/USD pair dips below $23.9777, a drop to $20 is possible.
Conversely, if the pair reverses direction from the current levels or $23.9777, a few days of range-bound action is likely. A break above $38.8015 will be the first sign that buyers are back in the game.
EOS could not rise above the $2.1624-$2.4001 resistance zone, which shows that bears are unwilling to let go of their advantage. If the bears can sink the altcoin below the recent low at $1.42, the next stop is likely to be the psychological support at $1.
EOS USD daily chart. Source: Tradingview
However, if the EOS/USD pair bounces off the support at $1.42, a few days of consolidation is possible.
The first sign of strength will be if the pair can sustain above $2.4001. As the price had turned down from the 20-day EMA on three previous occasions, we will wait for the pair to climb and sustain above it before recommending a trade.
Binance Coin (BNB) has been trading below the overhead resistance of $12.1111 for the past three days, which shows a lack of buyers at higher levels. The bears would make one more attempt to resume the downtrend by breaking below the recent low of $6.38.
BNB USD daily chart. Source: Tradingview
If successful, the decline can extend to the next psychological round figure of $5. We anticipate the bulls to aggressively defend the zone between $4 to $5.
Conversely, if the BNB/USD pair can reverse direction from the current levels or from the lows at $6.38, a few days of range-bound action is likely. The pair will show signs of strength on a break above $12.1111 and is likely to pick up momentum after the price sustains above the 20-day EMA. Until then, we remain neutral on the pair.
The bears did not allow Tezos (XTZ) to re-enter the descending channel. This is a negative sign as it shows that the buyers are still not confident that a low is in place. The failure to rise inside the channel has attracted fresh bout of selling.
XTZ USD daily chart. Source: Tradingview
If the bears can sink the price below the recent low of $1.0096, it will be a huge negative. Below this level, the drop can extend to $0.85.
Conversely, if the bulls defend the support at $1.0096, we might see another attempt to push the XTZ/USD pair back into the channel. A break above $2 will be the first sign that buyers are back in action. We will wait for a new buy setup to form before suggesting a trade in it.
UNUS SED LEO (LEO) continues to be an outperformer as it has still not seen panic selling engulf it. The altcoin has gradually slided to the support at $0.9081. We expect the bulls to defend this support aggressively.
LEO USD daily chart. Source: Tradingview
If successful, the LEO/USD pair will remain range-bound between $0.9081-$1.04 for a few more days.
Contrary to our assumption, if the bears sink the pair below $0.9081, a drop to the next support at $0.85 is likely. If this support also cracks, a retest of $0.80512 is possible. On the upside, a break above $1.04 will be a huge positive.
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.
Top 5 Cryptos This Week (Mar 15): LEO, XLM, ETC, XRP, HT
This week saw huge selling in almost every asset class as panic gripped traders on the ever-spreading coronavirus cases. Cryptocurrencies were also not spared as they came under huge selling pressure on March 12 and 13, which wiped off about $92.5 billion in total market capitalization. Now, the bulls are attempting to stage a recovery.
The fall of the past few days has shaken the belief that Bitcoin is a safe haven similar to gold and is a preferred place to hide during selling in equity markets. However, co-founder and partner at Morgan Creek Digital Anthony Pompliano said that the shutdown of economic activity due to coronavirus outbreak has led to a liquidity crisis due to which all asset classes, including safe havens, are being sold.
Crypto market data weekly view. Source: Coin360
During the previous financial crisis, gold had also witnessed sharp selling initially as investors preferred cash over holding any asset. However, later, gold embarked on a multi-year bull market. Investors who bought the dip or held on to their gold were rewarded handsomely. Pomp believes that investors who hold on to their Bitcoin will reap the benefits as central banks resort to additional rate cuts and quantitative easing to tide over the current slowdown.
In the short-term, volatility is likely to remain high as the world tries to come to terms with the uncertainty regarding the coronavirus pandemic. However, we believe that the current dip might offer one of the best buying opportunities for long-term investors after a bottom is confirmed. Let’s analyze the top performers of the past seven days to see how their charts are shaping up.
UNUS SED LEO (LEO) was the best performer of the past seven days as it managed to buck the carnage in cryptocurrencies with only a 3% fall. This propelled it into the top 10 list in terms of market capitalization.
During the week, the total LEO tokens burned crossed the 15 million mark. While Increased volatility had put other cryptocurrencies under stress, it turned out to be a boon for LEO as a large number of tokens were burned on March 12 and 13.
LEO USD daily chart. Source: Tradingview
The LEO/USD pair has been trading in a tight range of $0.9081-$1.04 for the past few weeks. This shows that the pair has been stable and has not participated in the recent selloff.
If the bears can sink the price below the range, a drop to the lows at $0.80512 is possible. We anticipate the bulls to defend this support aggressively. However, if the selling picks up momentum and the pair breaks down to new lows, a drop to $0.70 is possible.
Conversely, if the bulls can push the price above $1.04, a move to $1.1719 is possible. If this level is crossed, the up move can retest the stiff resistance at $1.36. We expect the bears to defend this level aggressively. However, if the bulls can scale the price above $1.36, the pair is likely to pick up momentum.
Stellar Lumens (XLM) was the second-best performer even though it slumped about 31% in the past seven days. This shows the extent of selling seen in the major cryptocurrencies.
XLM USD weekly chart. Source: Tradingview
The XLM/USD pair had been trading between $0.088708 on the upside and $0.042133 on the downside for the past few months. However, the sharp selling this week broke below the critical support at $0.042133 and dragged the price to $0.026063.
While the breakdown to new yearly lows is a negative sign, we like the way the pair has bounced off the lows. This shows strong demand at lower levels. If the bulls can push the price back above $0.042133 and sustain the level for a few days, it will indicate that the current fall was a bear trap.
We anticipate the bears to mount stiff resistance at $0.042133-$0.051014, above which the pair is likely to gradually move up to $0.088708.
However, if the bulls fail to sustain the price back above $0.042133, the bears might attempt to sink the price below $0.026063. If successful, the downtrend will resume.
Ethereum Classic (ETC) also faced the brunt of the bears and plunged about 32% in the past seven days. However, that was good enough for it to earn the spot as the third-best performer of this week. ETC’s block reward will be reduced by 20% from 4 ETC to 3.2 ETC on March 16. Let’s study the chart to find out how the market participants are positioning themselves for the coming weeks.
ETC USD daily chart. Source: Tradingview
The ETC/USD pair has been trading inside a large range of $14 on the upside and $3.40 on the downside for about one-and-half years. After failing to break out of the range between Jan. 29 to Feb. 13, the pair succumbed to selling pressure.
This week, the momentum picked up on the downside and the price broke below the $3.40 support to hit a new yearly low at $3.08378. While this is a negative sign, we like the way the price quickly bounced off this level, which shows buying by the bulls at lower levels.
The best way to trade a ranging asset is to buy on a bounce off the support of the range. Therefore, the traders can watch the pair for a few more days and buy if the price sustains above $4.0 levels.
The stop-loss can be placed just below the recent lows. As the overall sentiment is negative, we suggest a position size of about 40% of usual. The rest of the position can be added after the bulls push the price above the 20-week EMA. Contrary to our assumption, if the price turns around from the current levels and plummets below $3.08378, a new downtrend will begin.
XRP lost about 33% in the past seven days and turned out to be the fourth-best performer among major cryptocurrencies. Can the altcoin turnaround or will it continue to slump in the next few days? Let’s study its chart to find out.
XRP USD daily chart. Source: Tradingview
The failure of the bulls to sustain the price above $0.34229 last month attracted profit booking. Since then, the XRP/USD pair had been falling inside a descending channel. The selling picked up momentum this week as the pair plunged below the critical support at $0.17468 and also broke below the support line of the descending channel.
The pair dropped to a new multi-year low of $0.114, which is a negative sign. Though the price bounced off the lows, the bulls have not managed to push the price back above $0.17468.
This shows a lack of urgency among bulls to buy even at these levels because they are not confident that a bottom is in place. If the price continues its downtrend and breaks below $0.114, the next support is likely to be the psychological support at the round figure of $0.10. If this support also cracks, the next support is at $0.070.
Conversely, if the bulls can push the price back above $0.17468, it will indicate demand at lower levels. We will wait for the pair to break above the descending channel before turning positive.
Huobi Token (HT) rounded up the top five list with a drop of about 34% in the past seven days. The Huobi group launched Huobi Lite, a new mobile application that will allow users to trade major cryptocurrencies without any fees or commissions. A few days back, on March 5, Huobi had launched operations in Thailand undeterred with the advance of coronavirus in the region.
HT USD weekly chart. Source: Tradingview
The HT/USD pair is currently trading inside an ascending triangle. Though the price broke below the support line of the triangle this week, the positive thing is that the bears could not sustain the lower levels.
The sharp bounce off the lows shows strong demand at lower levels. Currently, the price has re-entered the triangle. If the bulls can arrest the next dip above the support line of the triangle, it will signal that the current fall was a bear trap.
If the price can sustain above $3 levels for a few days, it can offer a buying opportunity with a target objective of $5.3506 in the medium-term. A break above $5.3506 will be a huge positive.
However, if the bears again sink the pair below the support line of the triangle, it will be a huge negative as it will invalidate the ascending triangle pattern. In such a case, a drop to $1 is possible.