China has decided to Shut down the operations on BTC by Sept. 30. The first reaction by harried traders on the announcements is to sell and encash their holdings. Therefore, the sharp fall is understandable.
Does this call for the traders around the world should also panic? No, because after the initial selling subsides, aggressive bulls will start buying at important support levels. Should we also join the early buyers or should we wait for more confirmation before initiating long positions?
Bitcoin has completed a 61.8 percent Fibonacci retracement of the rally from $1,752 to $4,975. Aggressive buyers have taken advantage of the sharp fall and have initiated long positions close to $2,970 levels, which is a crucial support.
Moreover, it is sure that Bitcoin will quickly rally to $5,000 levels because the bears will again short at higher levels. We expect selling pressure at the $3,800 levels, closer to the downtrend line.
Therefore, we recommend waiting for another successful retest of $2,970 before initiating long positions.
However, aggressive traders can buy 25 percent of their allocation on dips to about $3,200 levels. The stop loss should be placed at $2,900 and the profit objective is $3,800.
The digital currency is likely to remain volatile for the next few days. Therefore, traders should play for small profits.
Ethereum broke below the 61.8 percent Fibonacci retracement of the rally from $129.78 to $409.42. However, strong buying support emerged closer to the $200 levels, pushing prices higher.
Nevertheless, the digital currency is trading inside a descending channel. We expect bears to sell closer to $270 levels. Therefore, we recommend waiting for a successful retest of $200 levels before buying. First signs of a bottom will form when the digital currency breaks out and sustains above the descending channel.
Aggressive traders can buy closer to $220 and keep a stop loss of $190. Profits should be booked closer to $270 levels.
Bitcoin Cash completed a 100 percent retracement of the rally from $296.38 to $972. $300 is a strong support, which has held for now. However, we expect selling close to the downtrend line
Any long position should be initiated only after a successful retest of $300 levels. We prefer to buy the leaders because they are likely rebound more than Bitcoin Cash.
We were short on ripple and our first target objective of $0.15000 was met. Hopefully, traders would have booked their profits.
The digital currency is currently in a pullback, which is likely to face resistance at the $0.19300 levels. If the overhead resistance holds, the cryptocurrency is likely to turn down towards $0.15000 levels once again. However, if price breaks out of the overhead resistance, it can rally to the downtrend line.
We shall look for buying opportunities only after ripple breaks out of the downtrend line and $0.19300 levels.
Litecoin had broken below the descending triangle pattern, which had a target of $30. Today, the digital currency came close to its target and reversed from there. Currently, it has risen about $20 from its intraday lows of the day, which shows the kind of huge volatility in it.
All the top five cryptocurrencies have become very volatile. Therefore, traders should reduce their allocation size by at least 50 percent to safeguard their capital.
*Bitcoin, Ethereum and Litecoin charts are provided by HitBTC exchange.
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