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RSI Calls Deeper Pullback
BTC: Price: $5,450 | MCAP: $97 billion | 24-Hr Volume: $14.25 billion
Short-term trend: Bearish
Bitcoin fell more than 1 percent yesterday, confirming a bearish divergence of the 14-day relative strength index. The cryptocurrency witnessed notable price pullbacks following the confirmation of the bearish divergence in the past.
For instance, BTC confirmed a bearish divergence of the RSI with a 2 percent drop to $9,623 on May 6, 2018, and fell 38 percent to lows below $5,800 by the end of June.
Before that, the 14-day RSI diverged in favor of the bears with bitcoin’s 6.5 percent price drop to $17,700 on Dec. 19, 2017. That was followed by a quick 36 percent sell-off to $11,200 by Dec. 22.
If history is any guide, then the latest bearish divergence could yield a drop to levels below $5,000.
Long-term trend: Bullish
Bitcoin's 14-week relative strength index (RSI) moved above the key resistance range of 53.00–55.00 earlier this month, validating the longer-term bullish reversal signaled by a falling channel breakout witnessed two weeks ago.
Supporting the longer run bullish case is the two-week MACD histogram's positive turn, the first since February 2018.
The longer run bullish outlook would be neutralized if the price finds acceptance below the 200-day MA, currently at $4,482.
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Bull Trap ENJ: Price: 3060 sats | MCAP: 23474 BTC | 24-Hr Volume: 3,690 BTC
Short-term trend: Bearish
Enjin coin is currently reporting a 3.16 percent gain on a 24-hour basis.
These gains, however, could be short-lived, as the cryptocurrency confirmed a bear flag breakdown, a bearish continuation patten, with a UTC close at 2943 yesterday.
As the name suggests, the bear flag often ends up accelerating the preceding bearish move.
As a result, ENJ/BTC risks revisiting the recent low of 2579 sats in the next few days. Also supporting the bearish case is the bear cross of the 5- and 10-day moving averages.
Long-term trend: Bearish
The path of least resistance is to the downside, as the 5-week and 10-week moving averages have produced a bearish crossover and the January 2018 high of 3440 sats has again become a support.
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Tezos Drops 5 Percent XTZ: Price: $1.23 | MCAP: $800 million | 24-Hr Volume: $7.4 million
Short-term trend: Bearish
XTZ created a bearish marubozu candle yesterday, which occurs when the price closes at or very close to the lowest point of the day. Essentially, it means sellers remained in control throughout the day.
Further, the cryptocurrency closed yesterday below the ascending 10-day moving average.
The short-term outlook, therefore, has turned bearish with scope for a test of potential demand around the former resistance-turned-support at $1.11 (March 11 high).
Long-term trend: Bullish
The price is still holding well above the upward sloping 50-day moving average (MA), currently at $0.8731. Hence, the long-term outlook remains bullish.
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With crypto market showing signs of life, investors may feel tempted to bet huge sums of money on cheap altcoins.
After all, alternative cryptocurrencies had posted staggering gains during the previous bull market. Further, the social media is always full of stories about traders who became millionaires overnight by betting big on a single trade.
In reality, however, there is no single trade that will make a trader rich and traders who do get rich overnight by betting big on a single often get hooked to such undisciplined trading methods and end up losing everything.
So, @TrueCrypto28 is right in stressing the need for sound risk management. Seasoned investors usually build a well-diversified cryptocurrency portfolio based on distribution, timing and choice of the cryptocurrency.
Distribution means the percentage of total funds to be invested in different coins. An investor with less risk appetite would have less exposure to high-risk altcoins with low trading volumes as opposed to an investor with big grubstake or a day trader.
Put simply, proportions can and do change according to an individual’s risk taking ability. However, a rational investor should never invest his entire cash in a single trade. |
Despite the recent rise in bitcoin’s price, the futures curve is still sloping downwards (backwardation), meaning contracts with a later expiration are trading consecutively lower.
Put simply, derivative traders are expecting bitcoin to trade lower than its current price over the coming months.
So, investors may feel tempted to question the sustainability of the recent price rally.
Before doing so, it is worth noting that the futures market positioning is known to change every other day.
Further, bitcoin futures trading volumes are very low compared to the volumes in the spot market. Thus, signals given by the futures curve are hardly reliable. |
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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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RSI Divergence