Welcome to the weekly edition of the CoinDesk Markets newsletter!
Every Friday we will review our cryptocurrency price predictions posted during the week via CoinDesk Markets Twitter or our private room on StockTwits, the CoinDesk Dojo.
"Trades You Missed" will feature our favorite trade ideas or technical analysis insights that accomplished impressive gains, where as "Trades We Missed" will feature those that took a turn for the worse.
Wins and losses are both part of the trading game, so we hope you will learn how to replicate our successes and minimize losses!
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Litecoin Charts Oversold Bounce
LTC/USD: Price: 9,320 sats | MCAP: 585,069 BTC | Maximum Gain: +5.7%
Why we were intrigued:
Bitcoin dived below $10,000 on July 16, opening doors for a recovery in alternative cryptocurrencies.
Litecoin, in particular, looked poised for a bounce on July 16 with the daily chart flashing a bullish divergence of the moving average convergence divergence histogram (MACD) .
Further, on July 17, the hourly chart reported a bullish divergence of the relative strength index. Note that early signs of a trend reversal like the bullish divergence of the RSI or MACD gain credence only when the price is showing signs of seller exhaustion.
LTC created a bullish hammer on July 16, which occurs when the day begins with sellers in control buy ends with a victory for the bulls. The bullish hammer is widely considered a sign of seller exhaustion or an early sign of bullish reversal if it appears following a prolonged sell-off.
That was the case here. The bullish hammer was charted following a four-week drop from 18,000 sats to 8,000 sats.
With stage set for a recovery rally, our analyst recommended a buy trade in LTC/BTC in the European trading hours on July 17 when prices were trading at 8,514 sats. As expected, the cryptocurrency rose achieved the target of 9,000 sats on the same day and further extended gains 9946 on July 18.
As of writing, LTC/BTC is trading at 9,320 on Binance. On the daily chart, the MACD has crossed into bullish territory above zero and the RSI has bounced up from oversold levels. Also, the move higher seen this week is backed by an uptick in buying volumes.
So, it won't be a surprise if LTC/BTC outperforms its peers next week. Note that the fourth-largest cryptocurrency is set to undergo mining reward halving on Aug. 5.
The Trade
 The Result  |
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Bitcoin Stuck at Key MA
BTC/USD: Price: $10,300 | MCAP: $187 billion | Maximum Loss: Nil
Why we were intrigued:
Bitcoin jumped above $10,000 on Thursday, weakening the case for an immediate drop below the May 31 high of $9,097 (Bitstamp prices).
While the bull move was impressive, it did little to change the overall bearish outlook. This is due to the fact that the cryptocurrency closed yesterday at $10,648, leaving the crucial resistances of $10,759 (monthly opening price) and $10,850 (daily chart resistance) intact, as tweeted by popular analyst Josh Rager.
More importantly, the move fizzled out well ahead of $11,080, keeping the bearish lower highs pattern valid on the 4-hour chart. Also, prices repeatedly struggled to cross the descending 50-candle moving average (MA) resistance on the 4-hour chart throughout the Asian session.
Further, the 50-candle MA dropped below the 200-candle MA, confirming a bearish crossover. So, the analyst called a pullback to $10,000 earlier today when the cryptocurrency was trading at $10,673.
As expected, prices began falling and hit a low of $10,226, before bouncing quickly to our entry price of $10,670. With BTC showing signs of life, the CoinDeskDojo members were asked to unwinding their shorts at cost.
The reason for the sudden spike is still unclear. however, the move back to $10,670 was short-lived, possibly due to the news that that the U.S. Commodity Futures Trading Commission (CFTC) is probing BitMEX, which offers trading of cryptocurrencies with up to 100-times leverage and products such as futures and swaps, over whether it allowed Americans to use its platform.
All-in-all, the outlook is still bearish and the cryptocurrency could drop below $10,000 in the next few hours.
The Trade
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| Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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Litecoin Shines