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Bitcoin tests downtrend resistance; Ethereum continues bottoming out; XRP in accumulation

In Insights

Bitcoin (BTC/USD) is about to complete a massive triangle pattern (on the weekly chart), with BTC/USD bumping up against triangle resistance.

This triangle, although imperfect insofar as its resistance line being drawn not from the peak of the rally in late 2017, strongly suggests a looming volatility spike with BTC/USD's trading range having recently shrunk to near a two-year low.

Particularly interesting was how BTC/USD's intramonth volatility fell below the S&P500's in October 2018. Markets that are near historical lows in volatility often soon after revert towards mean volatility levels. The question is whether BTC/USD's volatility expansion will translate into upside price swings, or to the downside.

BTC/USD is also hovering just above a major support zone straddling the psychologically key USD6,000 whole figure level. Although the weekly RSI, Stochastics and MACD are bottomish, the daily equivalents are a bit wobbly, suggesting any downside in the next few days will remain modest.

 

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Ethereum weekly/daily

Ethereum (ETH/USD) is continuing an ongoing two-month-plus bottoming effort around the psychologically key USD200 whole figure level. Given the extended period last year in Q2 and Q3 of ETH/USD bouncing off near the 200 support zone before finally rallying strongly in Q4, it looks like this support area may continue to hold.

As with BTC/USD, ETH/USD appears poised for a volatility spike after having seen volatility fall near historical lows. Markets that are near historical lows in volatility often soon after revert towards mean volatility levels. The question is whether ETH/USD's volatility expansion will translate into upside price swings, or to the downside. As with BTC/USD, the weekly RSI, Stochastics and MACD are bottomish, signalling downside in the next few days may remain modest.

 

XRP daily

Ripple (XRP/USD) is continuing an ongoing two-month plus bottoming effort around the psychologically key USD0.50 whole figure level. Given the green volume bar surge in the last two weeks or so, accumulation appears to be occurring. One-day upside price spikes in September also suggest that bulls are preparing for a rally. Significantly, XRP/USD is testing a downtrend resistance line (on the daily chart) and appears to be gearing up for another break attempt this week.

As with BTC/USD, XRP/USD stands poised for a volatility spike after having seen volatility fall near historical lows. The question is whether XRP/USD's volatility expansion will translate into upside price swings, or to the downside. Although the daily RSI, Stochastics and MACD are fairly neutral, the weekly equivalents are rallying, suggesting any downside in the next few days will remain modest.

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This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

WRITTEN BY

Darren Chu, CFA

Darren Chu, CFA, is the founder of Tradable Patterns, publisher of daily technical analysis on Bloomberg, Thomson Reuters, Factset, Interactive Brokers, Inside Futures, and other partner websites. Before the launch of Tradable Patterns, Darren served as IntercontinentalExchange | NYSE Liffe's country manager for Australia, India, and the UAE, expanding his role to look after Liffe business development in APAC ex-Japan/Korea until his departure mid April 2014. Previously, Darren was with the TMX Group | Montreal Exchange, marketing Canadian futures and options across North America, London, Singapore and Hong Kong. Darren also launched and managed CMC Markets Canada's Chinese marketing and sales team, along with educational offering. Visit www.tradablepatterns.com for more information.