Price Analysis 5/4: Jefferies Greed & Fear email written by Christopher Wood recommends both retail and institutional investors buy Bitcoin (BTC) ahead of the upcoming halving which is less than eight days away. They anticipate that a rally after the event will be similar to the previous two halvings. Jefferies recommends that investors use Bitcoin to diversify their portfolio, similar to gold.
However, forecasting a rally post halving just because the top-ranked cryptocurrency on CoinMarketCap has done so previously might not play out as expected. During the previous two halvings, the main participants were early crypto adopters but that is not the case now.
Since the last bull market several new traders have entered the space and became rich in a short time period. Therefore, after every small rally, talks about a strong bull run can be heard. If speculators buy Bitcoin in anticipation of a strong rally post halving that does not materialize, then a sell-off is likely.
However, the profit booking is unlikely to result in a massive sell-off because Bitcoin has held exceedingly well during the current crisis. Therefore, strong demand is likely to kick in at lower levels. The volatility is likely to remain high in the next few days leading to halving and a few days after the event. This could offer excellent trading opportunities to the short-term trader who can enter and exit positions quickly without waiting for a home run on every trade.
This view will be invalidated if the world faces a black swan event. If that happens, panic might set in again and result in a sharp drop in prices.
The sharp bounce off today’s low at $8,526.38 suggests strong buying by the bulls on dips. Both moving averages are sloping up and the relative strength index remains close to the overbought zone, which suggests that bulls are in command.
A pennant can be spotted on the charts. If the bulls can break out of this setup, the uptrend is likely to resume. The target objective of this pennant is $10,857.89, which is close to the resistance line of the symmetrical triangle.
However, the bears are unlikely to give up easily. They would attempt to stall the rally at $10,000 and again at $10,500.
This bullish view will be invalidated if the pair breaks down of the pennant. In such a case, a drop to the 20-day exponential moving average ($7,961) is likely. For now, the stops on the rest of the long position can be trailed just below the 20-day EMA.
Ether (ETH) turned down from the resistance line of the ascending channel on May 3. This attracted profit booking by the short-term traders, which resulted in a drop to the 20-day EMA ($192).
This triggered the stop-loss on 50% of the long positions at $200 as suggested in the previous analysis. Stops on the rest of the position can be retained at $185 to give a larger wiggle room to the 2nd-ranked cryptocurrency on CoinMarketCap.
The sharp bounce off the 20-day EMA is a positive sign as it shows strong buying by the bulls on dips. The bulls will make another attempt to push the price above the channel.
If successful, the ETH/USD pair is likely to pick up momentum and rally to $250 and then to $289.599. The trend will turn in favor of the bears if the pair breaks below the channel.
XRP has once again bounced off the $0.20570 support today, which is a positive sign. This shows that the bulls are defending this level aggressively. They will now try to carry the altcoin to the overhead resistance of $0.24560.
The upsloping moving averages and the RSI above the 60 level suggest that bulls have the upper hand. A break above $0.24560 can result in a move to the long-term downtrend line at about $0.28.
However, if the bulls struggle to propel the 3rd-ranked cryptocurrency on CoinMarketCap above $0.24560, traders can book partial profits on their long positions and trail the stop-loss on the rest of the position to $0.20. Below this level, a drop to $0.17372 is possible.
The failure of the bulls to propel Bitcoin Cash (BCH) above $280.47 might keep it range-bound between $200-$280.47 for a few more days. Both moving averages are flat and the RSI is close to 50, which suggests a balance between supply and demand.
Conversely, if the BCH/USD pair bounces off the 20-day EMA, the bulls might make one more attempt to push the price above $280.47. If successful, a new uptrend is likely.
Bitcoin SV (BSV) continues to remain range-bound between $170-$227. The failure of the bulls to propel the price above the range attracted profit booking. The altcoin dipped below the 20-day EMA today, which triggered the stop-loss on the long positions suggested in the previous analysis.
Both moving averages have flattened out and the RSI is just above the midpoint, which also points to a few more days of consolidation.
The advantage will tilt in favor of the bulls if they can propel the 6th-ranked cryptocurrency on CoinMarketCap above the range. Such a move will signal the start of a new uptrend, which will offer another opportunity to the traders to initiate long positions. Conversely, a break below $170 will signal that bears have the upper hand.
Litecoin (LTC) turned down from $50.0351 on May 3, which shows that the bears are aggressively defending the $50-$52.2803 zone. The bulls are currently attempting to defend the 20-day EMA ($45).
If successful, the bulls will make one more attempt to carry the 7th-ranked cryptocurrency on CoinMarketCap above the resistance zone. If the price sustains above the zone, a rally to $63.8769 is likely.
The upsloping moving averages and the RSI in the positive zone suggests a slight advantage to the bulls.
This view will be invalidated if the bears sink the LTC/USD pair below the 20-day EMA and the support at $43.67. If this support zone breaks, a drop to $40 is possible. Therefore, the stops on the long positions can be kept at $42.
Binance Coin (BNB) has pulled back to the 20-day EMA ($16.26) after failing to sustain above the overhead resistance of $17.4775. This suggests that the bears are aggressively defending this level.
If the 8th-ranked crypto-asset on CoinMarketCap rebounds off the 20-day EMA, it will be a positive sign. Such a move will increase the possibility of a breakout of $17.4775. Above this level, a rally to $21.50 is likely.
Conversely, if the bears sink the price below the 20-day EMA, it will signal a lack of buyers at these levels. Below this level, a drop to $13.65 is possible. Therefore, the traders can retain the stop-loss on the long positions at $15.50.
EOS has broken below the $2.8319 support, which suggests that the momentum has weakened. The bulls are currently attempting to defend the uptrend line. If successful, the bulls will make one more attempt to carry the price to $3.1802.
Currently, both moving averages are flat and the RSI is close to the midpoint, which suggests a balance between buyers and sellers.
The advantage will tilt in favor of the bears if the 9th-ranked cryptocurrency on CoinMarketCap breaks below the uptrend line. Below this level, a deeper pullback to $2.3314 is possible. Therefore, the stop-loss on the long positions can be retained at $2.50.
Conversely, a breakout of $3.1802 will signal that bulls are in command and a rally to $3.8811 will be on the cards.
Tezos (XTZ) pulled back to the critical support of $2.55900337 today. The 20-day EMA is placed just below this level. Hence, this level is acting as a strong support. With both moving averages sloping up and the RSI above 60 levels, the advantage is with the bulls.
If the 10th-ranked cryptocurrency on CoinMarketCap breaks above the small downtrend line, a rally to the $3.07369598-$3.2712 resistance zone is likely. This zone might act as a stiff resistance, hence, the traders can book profits if the bulls struggle to scale the price above it.
Conversely, if the XTZ/USD pair breaks below $2.55900337, a drop to the support line of the ascending channel is likely. Therefore, the traders can retain the stop-loss on the remaining long positions at $2.55.
Stellar Lumens (XLM) rallied and closed (UTC time) above the overhead resistance of $0.073434 on May 2. This suggested that the bulls were in command and a move to $0.089238 was on the cards.
However, the 11th-ranked cryptocurrency on CoinMarketCap turned around on May 3 and plunged back below $0.073434. Interestingly, this was the fifth consecutive time the price had pulled back after the RSI had reached overbought levels (marked as ellipses on the chart).
Barring the pullback in Jan. of this year, all other pullbacks had resulted in a sharp decline. Therefore, the critical level to watch out for is $0.062805. If the XLM/USD pair sustains above this level, the bulls will make one more attempt to push the price above $0.073434. If successful, a rally to $0.089238 is likely.
Conversely, if the bears sink the pair below $0.062805, it will signal weakness. Below this level, the decline can extend to the 50-day simple moving average ($0.049).
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.