Dead cat lures but bulls hold the key


  • Bitcoin price hits a curb at $44,088, but if bulls can keep the fade contained, investors can start dreaming of $50,000.
  • Ethereum price action sees investors hesitant of breaking above the 200-day SMA, but tailwinds should help the conviction.
  • XRP bulls got support at $0.78 covering their back and should only result in more upside to come.

Bitcoin price and other majors, for that matter, are keeping investors on their toes this morning as most cryptocurrencies are seen hitting obstacles in their trudge higher – performing minor pullbacks after Asian equities were unable to book a third consecutive winning streak. It is critical, in all three significant pairs, that bulls keep their act together and price action remains muted with no significant fades, in order to indicate the recovery has merely been a dead-cat bounce. If investors can uphold their positions and don’t fall into panic selling, more upside and gains are on the table by Friday and over the weekend.

Bitcoin price sees RSI flatlining, which points to sellers increasing their bets and matching demand on the buy-side

Bitcoin (BTC) price’s winning streak was cut short on the third day after price action hit $44,088. BTC bulls have not been able to push price action beyond that level and instead showed a slight pullback to around $44,000. With the Relative Strength Index (RSI) flatlining at 40, bears are present in the market and matching the bull’s demand side, which is pushing the price action sideways for now. 

BTC price direction will be determined by who picks the short straw, the bulls or bears. Hence the importance for bulls of defending $44,088, a critical level, and keeping the fade in check so that sidelined investors will gain confidence in the rally’s strength. If so, this  could see a substantial uptick by tomorrow. If the Nasdaq can trade in the green again this evening, expect buy-demand volume to explode and see a quick ramping up in price action towards $48,760 where the 200-day Simple Moving Average (SMA); the historical level, the monthly pivot and a little bit above the 55-day SMA are all coming in together as a joint cap on price action.

BTC/USD daily chart

BTC/USD daily chart

If the fade enlarges under more persistent headwinds, expect a return to the monthly S1 support level. In the case where sentiment deepens even further, expect bears to drive price action even lower towards $38,073, with a target at $36,709 as the end of the line near term. The further downside would only be possible if negative sentiment is broad-based and visible across several asset classes in financial markets.

Ethereum sees bulls unable to break above 200-day SMA for now

Ethereum (ETH) price is similar to Bitcoin technical analysis, except that the current fade is under the pressure of a far more heavy cap that could trickle a broader sell-off and form a dead cat bounce and bull trap. The 200-day Simple Moving Average gave a firm warning to investors yesterday and this morning that more investments and buyers are needed to break the bear’s fortress build-up at that 200-day SMA near $3450. The RSI already sees a slight nudge to the downside, which could see ETH price action fall back a little bit bigger than foreseen. 

Expect $3,267 to do the trick and keep the fade in place. That short-term level comes from the base of the bullish triangle XRP broke out off this week. This move would see a pickup on demand from the buy-side and could spiral into an accelerated move to the upside, breaking the 200-day SMA quite firmly. A daily close above the 200-day SMA would be the green light for bulls to go ahead and attack the red descending trend line, which would see additional inflow on the buy-side from swing traders and longer-term investors, bringing price action back to $4,000 in the medium term.

ETH/USD daily chart

ETH/USD daily chart

As markets are on edge on any comment from the FED or any flair-up of geopolitical tensions with Russia or China, expect XRP to be quickly repriced as institutional investors will start to pull out their funds, which would see a shock-move to the downside with first drilling on $3,018. The next leg lower will target $2,695, held back in October.

XRP price sees bulls holding $0.79, which sets the stage for a return to $0.88

Ripple (XRP) pierced through the bearish barrier at $0.78 and sees the same level now as support to keep the current undergoing fade in check. Once a tailwind kicks in, expect XRP price action to quickly hit $0.84 with a historical line and the monthly pivot. Going into Friday, that would mean investors are ready for the next echelon higher towards $0.88, where another historical level and the 55-day SMA will be the entry point for bears to stop and try to curb the trend back to the downside.

XRP/USD daily chart
XRP/USD daily chart

The considerable risk, for now, is just that because bulls reversed the downtrend on no real important level, the rally could be short-lived with bulls already out of breath against $0.84. Bears would come in and trickle profit-taking amongst investors, which would push price-action back towards the opening price this morning as quickly as it went up. A bull trap would unfold and see XRP price collapse to $0.58 with the monthly S2 support level and a historically significant support level coming into play.

 



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