Last week, we noted bearish set-ups in Ethereum and Bitcoin. Indeed, the sector as a whole has weakened and took a big spill yesterday on headlines of a Korean exchange hack. Generally, with the sector having lost its luster and the current environment viewed as part of a longer-term unwind in price and speculative interest, negative headlines are likely to be more of a bear than positive ones will be a boon.
See how positioning changes on the IG Client Sentiment page can help identify price direction in cryptocurrencies and other major markets.
Bitcoin broke 4-month trend-line support
In last week’s commentary, we noted a short-term bearish set-up in Bitcoin, but also highlighted a 4-month-long trend-line not far below which may help keep it supported and in the process of building a broader wedge pattern.
Yesterday’s downdraft clearly wiped out the trend-line, and support at 6400 and just above 5900 are both at risk of breaking in the near-term. A decline below the spike-low at 5920 would likely set off an acceleration in selling, as it was an important low following the bloodbath off record levels.
Check out this guide to learn more about how to trade Bitcoin and other cryptocurrencies.
BTC/USD Daily Chart (Trend-line broken)
Litecoin broke one series of support levels, others could be next
While the lower-highs since December and the lows at relatively the same price in recent months don’t make for a textbook descending wedge, the increasingly smaller rallies in the past 7 months imply LTC/USD may be ready for another round of carnage.
Yesterday marked the lowest closing print since December and below the March and late-May lows. Take out 102 and the phycological level of 100 and we may see another big leg lower in the weeks and months ahead.
LTC/USD Daily Chart (Lower-highs, support breaking)
Helpful Resources for Cryptocurrency Traders
Whether you’re a new or experienced cryptocurrency trader, we have several resources to help you;Introduction to bitcoin trading guide, indicator for tracking trader sentiment, and a weekly webinar discussing the latest developments.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX