Bitcoin (BTC/USD) slid further this past week but continues tentatively drawing in short-term bulls looking to play the bounce off oversold levels (as seen on the weekly and daily chart) and support hinted by last September's low.
The daily RSI, Stochastics and MACD are bottomish, but should be viewed within the context of ongoing fragility in the weekly RSI and Stochastics, which have yet to decisively bounce off oversold levels.
Significantly, the weekly MACD white line continues sloping slightly down warning short-term bulls to take quick profits this week. A more sustainable bounce will typically follow a longer term basing pattern.
What's the play to make in a market like this?There are a few options. You may wish to take a step back and wait it out or you could trade on margin and short the rallies. If margin trading isn't your thing, there's alsolending.
Ethereum (ETH/USD) also slid further this past week to below the psychologically key USD100 whole figure level. Given the bottomish daily RSI, Stochastics and MACD, and the early bottomish weekly equivalents, risk:reward is becoming increasingly favorable for bulls.
Before longer-term bulls look to establish fresh longs, they'll want to see the weekly RSI, Stochastics and MACD decisively turn up. Bears meanwhile looking to initiate shorts should be cautious as ETH/USD has already unwound all of the rally from the second half of last year.
A successful recovery this week of ETH/USD to the 100 whole figure level would be tentatively bullish and could coincide with a test of the downtrend resistance line connecting the December 2017 peak and this past November's high.
Ripple (XRP/JPY) showed signs of slowing in its descent. If XRP/JPY manages to bounce this week back above the psychologically key 50 whole figure level, it'll likely have formed a higher December low versus the August and September lows.
With the bottomish daily RSI, Stochastics and MACD, XRP/JPY may not retest the 2018 low, especially if the tentatively short-term bottomish signals of Bitcoin (BTC/USD) and Ethereum (ETH/USD) boost sentiment across the broader sector.
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.
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.