Countries like Japan and Georgia are moving towards more digitized economies: what do the charts say about improving crypto fundamentals?
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The market data is provided by the HitBTC exchange.
Adena Friedman, president and CEO of Nasdaq Inc., believes that cryptocurrencies will have an important role to play in the future, if they can integrate into the economy and find greater practical utility. Clarity on regulations and governance can provide the necessary boost to the nascent asset class.
One country that could be at the forefront of retail adoption of cryptocurrencies is Japan. Currently, most transactions in Japan involve paper bills and metal coins, however, the nation is attempting a shift towards a cashless society.
The top banks in Japan are working on the development of blockchain-based payment networks that can be operational in time for the Summer Olympics in Tokyo by 2020. If successful, the third largest economy of the world could bring about a change that will force other economies around the world to take notice.
Several smaller countries are also trying to gain leadership in this space. Georgia has migrated most of its land registry to blockchain and the tax system might soon follow.
The country also subsidizes local crypto companies via various means, such as discounted electricity rates, tax-free zones and land at nominal prices. Georgia hopes to beat the other crypto-friendly nations like Malta and Bermuda and become an international leader in crypto.
While the fundamental factors are improving by the day, the price is not following suit. However, a Bloomberg analyst expects Bitcoin (BTC) to rally in the short term, based on a study of technical indicators. What does our study forecast? Let’s find out.
The volatility in Bitcoin (BTC) has shrunk over the past few days. This period of low volatility will eventually lead to a range expansion. The longer the time spent in a tight range, the stronger will be the breakout or breakdown from it.
It is difficult to predict the direction of the break. During the previous period of low volatility from mid-September to mid-November 2018, the attempt to break out on Oct. 15 failed. After that, the BTC/USD pair broke down on Nov. 14, resulting in a quick drop from $6,480.54 to $3,620.26 within a short span of time.
The important resistance to watch on the upside is the downtrend line, and above it the $4,255 mark. A break out of these levels will signal a probable trend reversal.
On the other hand, a breakdown of $3,236.09 will resume the downtrend. The next support on the downside is the psychological level of $3,000. We shall wait for an upside range expansion before recommending a long position.
Ripple (XRP) bounced from the area of $0.30550 on Jan. 22. This shows demand at lower levels. However, the failure of the bulls to break above the downtrend line and the moving averages means that buying dries up at higher levels. The down-sloping moving averages and the RSI below the 50 level suggest that supply exceeds demand.
The balance might tilt in favor of the bulls if the XRP/USD pair sustains above the moving averages. That would increase the possibility of a rally to $0.4. Based on that, we suggest long positions on a close above $0.336, with a stop loss of $0.305.
Conversely, if the price turns down from the downtrend line and breaks below $0.305, a drop to $0.27795 will be likely.
Ethereum (ETH) dipped below the support of $116.3 again on Jan. 22, but the bears could not capitalize on the breakdown. They could not force the price to the next lower support of $100. This shows that there is buying at lower levels.
Now, if the ETH/USD pair breaks out of the moving averages and scales above $134.5, it will indicate strength. If the price doesn’t drop below $116.3 again within the next couple of days, we might suggest long positions with an allocation of about 30 percent of the usual size. The remaining positions can be added once the price is above $134.5.
On the other hand, if the cryptocurrency fails to rise above the moving averages, the bears will again attempt to break the support at $116.3 on a closing (UTC time frame) basis.
The bulls haven’t been able to push Bitcoin Cash (BCH) above $141 since breaking down of it on Jan. 10. On the downside, $121 has been acting as a strong support. Though the bears had broken below this level during intraday trading, they haven’t been able to close (UTC time frame) below this support in the past few days.
We expect the bulls to attempt to break above $141. If they are successful, the BCH/USD pair can rise to $177.3, and above it to $239. We might suggest a long position above $141. Until then, we remain neutral on the coin.
If the bears defend $141, the cryptocurrency will remain stuck in the tight range of $120–$141.
EOS bounced off the support at $2.3093 on Jan. 22, but the bulls haven’t been able to push the price above $2.5840.
If the price breaks out of $2.5840, the EOS/USD pair can rally to the next overhead resistance at $3.2081. We might suggest a long position if the price sustains above $2.5840.
However, if the bulls fail to scale $2.5840, the cryptocurrency might extend its stay in the tight range of $2.3093–$2.5840. A breakdown of $2.1733 will open the door for a decline to $1.7746, and below it to $1.55. We couldn’t find a tradeable setup at the current level.
Stellar (XLM) has gradually declined close to the yearly low of $0.09285498. Both moving averages are sloping down, and the RSI is in the negative territory, which shows that the sellers are in command.
If the bears sink the price to new yearly lows, the downtrend will resume. However, if the bulls defend the support at $0.09285498, the XLM/USD pair might bounce to the downtrend line. A break out of this overhead resistance can result in a consolidation between $0.09285498 and $0.13427050.
As the short-term trend is down, we shall wait for a trend reversal before recommending a trade.
Litecoin (LTC) has been trading between $29.349 and $33 since Jan. 12. Both moving averages are flat, and the RSI is close to 50 levels. This suggests a balance between the buyers and the sellers.
The next directional move will start on a breakout or breakdown of this tight range. A breakdown could result in a drop to $27.701, and below it to $23.090.
On the other hand, a breakout can carry the LTC/USD pair to $36.428 and above it to $40.784. Therefore, we suggest traders protect their long positions with a stop loss of $27.5.
Though Tron (TRX) has been consolidating inside the range of $0.0183–$0.02815521; the uptrending moving averages point to a probable break out of this range.
If the TRX/USD pair breaks out and closes (UTC time frame) above $0.02815521, it can rally to $0.03801042, and after that to $0.04. Therefore, we suggest long positions on a close (UTC time frame) above $0.02815521, with a stop loss at $0.023.
Conversely, if the bulls fail to scale above $0.02815521, the cryptocurrency will continue to trade inside the range. In such a situation, we shall wait for the price to correct to $0.0183 before suggesting a trade.
Though Bitcoin SV (BSV) slipped below $74.022 during intraday trading on Jan. 19 and Jan. 22, the close (UTC time frame) was above that level. We believe a close (UTC time frame) below $72 can plunge the pair to $65.031, and beyond that to $57.
The price is below both the moving averages and the 20-day EMA is sloping down. The RSI is also in the negative zone. All these indicators suggest that the sellers have the upper hand.
The BSV/USD pair will show signs of strength if the price sustains above the 50-day SMA. We shall wait for the range to expand to the upside before recommending any trades.
Cardano (ADA) bounced off the 50-day SMA on Jan. 22, but the bulls are struggling to push it above the 20-day EMA.
Both moving averages are flat, and the RSI is at the midpoint. This points to a consolidation in the near term. The ADA/USD pair might remain stuck between $0.040055 and $0.048331 for the next few days. It will turn negative if it slumps below $0.036815.
We shall wait for a reliable buy setup to form before suggesting a trade.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.