Yesterday saw BTC trading in a narrow range between $8400 and $9000. What I was looking out for was the formation of the right shoulder of the head and shoulders pattern, as we could be seeing a short term top forming. However, price moved above and close above the level of the left shoulder ($8640). That being said, it did not manage to reach the level of the head ($9100). Currently, price action is trading at the support level of the left shoulder. If we see price decline to below the level of the neckline ($7800) then we could see support at the moving average (black line), and if that fails, then a reversion to $6000. Conversely, if current support levels hold, we could see BTC testing the $9300 resistance level. The MacD on a 2-hour chart is about to turn bearish (not shown).
In the altcoin market, I spoke on Friday and yesterday about Bitcoin Cash, Qtum and Ethereum Classic. These coins had posted large gains over the course of Thursday/Friday. Did they continue these trends?
This was my analysis of Qtum on Friday 9th Feb:
Qtum has broken through the resistance zone, which has now become support. I am waiting for the current candle to close before making a call on this. But if it closes above the support line then we could see it test the next resistance zone at 0.004 BTC.
Followed by my analysis on the 12th of Feb:
We saw a swift reversal in the Qtum/BTC chart, following the close of the candle that I was referring too. It rapidly dropped through the newly formed support, before finding actual support at the 3 individual moving averages. There is a close correlation between the QtumBTC trendline and the BTCUSD trend, indicating that sentiment towards Bitcoin has a very large role to play in the pricing of this altcoin. When BTC price came down on Saturday, Qtum price followed suit. I would expect this relationship to continue. Thus, if BTC manages to form higher highs today then we could see Qtum break through resistance and test the 0.004 level. If not, then a reversion back to the lows could be on the cards.
Qtum/BTC has continued to trade sideways with very high levels of volatility and large spikes on volume. We can see a symmetrical triangle forming, with price coming up to the trend line soon. If we see a breakout to the upside, the first resistance level is to be found at 0.0034 BTC. Based on this level of volatility, trading Qtum on a short-term chart could be the route to go.
My analysis of Bitcoin Cash on the 9th of Feb:
Bitcoin Cash has come up against a resistance zone. If it manages to break above, and close above this zone, then this will become support for the next up leg towards 0.19 BTC. Alternatively, should resistance hold, we could see a reversion back to support at 0.13 BTC.
My analysis of Bitcoin Cash on the 12th of Feb:
BCH found the resistance that I was referring to, and experienced a reversal, finding support at the EMA 20, where it is currently trading. As with Qtum, we can see a strong correlation to the BTC/USD price trend. Thus, if Bitcoin price breaks down, I would expect BCH to test the support level of 0.13 BTC. Alternatively, a retest of the resistance level at 0.163 could be on the cards. Notice the dramatic uptick in On Balance Volume for BCH, indicating that there are a lot of buyers interested in trading this coin, as it has a history of massive upward breakouts.
As you can see in the chart below, BCH has continued the short-term downtrend. Finding support at 0.141 BTC. However, should this support level not hold, the next stop if the 0.13 BTC level I mentioned yesterday. Based on the strong upmove we saw last week, we could expect a pullback all the way to the 618 Fib level, below the support. Trading volume in BCH is high, and large, rapid moves not uncommon.
My analysis of Ethereum Classic 9th Feb:
Ethereum Classic has broken through the resistance zone, which may now become support. The next target is at 0.00323 BTC, where resistance is found. Should this move break down, support is found at 0.0025 BTC. This is a particularly attractive trade as upside potential is about double that of downside risk.
My analysis of Ethereum Classic 12th Feb:
ETC followed the BTC/USD declining trend on Saturday, briefly breaking through support, before bouncing back up again to form a higher high. I am keenly watching this coin; if BTC/USD breaks to the upside, then we could see ETC test the next resistance zone/ price target of 0.00323 BTC.
ETC had a big day yesterday, climbing rapidly all the way up to the resistance level I defined over the last two analyses. I would recommend taking some profits now. We could see a drop off based on this profit taking, or consolidation then another up move. However, ETC is approaching all time high prices in terms of BTC. This coin could gain a lot of attention and volume as traders jump on this. One to watch closely.
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Ricki specializes in the field of wealth management with a focus on holistic financial planning. He has a keen interest in the investment fields of property, technology, precious metals and cryptocurrencies. Ricki also holds a Masters degree in Science from the University of Stellenbosch.
Important Risk Notice:
Crypto Currencies are not defined as securities in terms of the Financial Markets Act, 2012 (Act No. 19 of 2012). The regulatory standards that apply to the trading of securities, therefore, do not apply to virtual currencies. Because virtual currencies are not regulated, users are not protected and are at the risk of losing money. Transactions are also irreversible. The price of virtual currencies is based on investor sentiment and can rise rapidly, thus attracting investors looking for very high returns from investments. However, the prices of virtual currencies tend to be very volatile and can drop as quickly as they rise. This may encourage speculative behaviour, which in turn spurs more volatility. Financial risks are, therefore, limitless and claims cannot be made for such losses.