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The traders continue to pile on Bitcoin, while altcoins languish. Bitcoin’s market dominance has crossed 55 percent, which shows that it’s now becoming a crowded trade. At times, it’s a good strategy to take the contrarian bet against the crowd.
So, is it a good time to book profits on our Bitcoin positions and buy a few altcoins, or does Bitcoin have legs to further extend the rally? Let’s see.
Leading up to its first fork in August, Bitcoin prices were in a corrective phase till about 15 days prior to the D-day. This time, however, prices have been in a consistent uptrend since bottoming out on Sept. 15.
After Bitcoin Cash was created, Bitcoin broke out and closed at new highs on Aug. 5, which started a strong uptrend that carried the cryptocurrency roughly 71 percent higher in just under a month. Will the same scenario be repeated this time?
Looks unlikely. Last time, there were a number of folks who had sold off prior to the fork and were sitting on the sidelines. When Bitcoin did not crash, as a few had expected, all this money jumped back in, boosting prices within a short span of time.
However, this time, people seem to be buying prior to the fork, so that they can benefit from the new coins. This is looking like a crowded trade. Can this get more crowded? Certainly.
However, as we are sitting on decent profits on about 35 percent of our original position, we recommend booking out completely at current levels. Can prices rise further from here and make us look like fools?
They certainly can.
However, it can equally fall back below $5000 once this buying frenzy ends. It’s always better to pocket good gains after a buying stampede and wait for the next opportunity.
We may have to buy at higher levels, but, that’s how it is. It’s very difficult to buy at the bottom and sell at the top.
Nevertheless, for traders who want to hold on to their long positions, the next target on the cryptocurrency is $6197. Bitcoin has support at the $5000 levels, which had been a strong resistance until now. The cryptocurrency will not become negative until it breaks below $4800 levels.
Ethereum continues to remain volatile, but is on the verge of breaking out of the range. In our last trade, we were caught on the wrong side, as the breakout was faded by the bears. So, how should we approach it now?
Even today, the cryptocurrency has formed a very large range with an intraday high of $352.52 and an intraday low of $274.67. Though prices have broken out of the range, which makes us bullish, the stop loss for the trade is very deep.
After four previous false breakouts, we would rather wait for Ethereum to end the day above the range, signaling the start of a new uptrend.
On a close above the range, our first target is $354, above which, a move to $400 is also possible. However, we are not recommending a trade on Ethereum until we get a closing above $317.
Bitcoin Cash is not showing any interest either from bulls or bears. It continues to slide gradually, struggling to hold the $300 levels.
The cryptocurrency is attempting to find support at the $282 levels. However, the pullback from the support is not very convincing. If Bitcoin Cash breaks below the immediate support zone of $265 to $282, it is likely to retest the lows.
On the other hand, any pullback is likely to face resistance at the downtrend line and the 20-day exponential moving average (EMA).
There are no bullish setups, therefore, we are not recommending any trade on it.
As is the case with most altcoins, Ripple is also facing selling pressure. As a result, it has fallen back into the descending triangle.
The cryptocurrency is attempting to hold the 20-day EMA. It if bounces off this support, it is likely to rally towards the recent swing high of $0.28000, above which a move to $0.30000 is also possible.
However, if the digital currency breaks down of the 20-day EMA, it has some support from the small uptrend line and the 50-day simple moving average.
Aggressive traders can go long on Ripple if it breaks out of the downtrend line of the descending triangle, and the smaller downtrend line drawn from the recent highs of $0.28000. This level is likely to be around $0.26000. The stop loss for this trade can be kept at $0.23000. We don’t want to hold the cryptocurrency if it again falls back into the triangle. The target objective on the upside is $0.30000.
Litecoin is one of the few altcoins that showed strong buying support yesterday. Though we did not have a buy recommendation on Litecoin, we did mention that it will become positive once it breaks out of the range.
Yesterday, the cryptocurrency rose sharply, breaking out of the overhead resistance of $57.72. However, today, the digital currency is facing a tough battle between the bulls and the bears at the $58 mark.
If traders entered long positions at $58, please hold with a stop loss of $48. The first target objective is $71.
Others who have not yet entered long positions can wait and enter above $61, which will signal a victory for the bulls. The stop loss, in this case, can be kept at $50 and the profit objective remains $71.
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