If you read all the analysis/trade setups in the Crypto Picks section, you’ll notice that I’ve talked about a temporary rebound and about a corrective phase after the last day’s impressive rally.
Technically, today’s aggressive drop was somehow expected because the major cryptocurrencies have reached very strong upside obstacles.
Cryptocurrencies – a new generation of speculative assets
Personally, I’m not surprised by the current sell-off as the cryptocurrencies are very volatile and you should be very careful when you trade or invest in them. Cryptocurrencies are representing the next generation of speculative assets, and they should be treated accordingly.
I’ve seen today all sorts of reasons why the cryptocurrencies have dropped. Most of the specialists have talked only about fundamental reasons. I want to show you the technical factors and reasons why the major cryptocurrencies have dropped today.
I’ve selected the most important three cryptocurrencies because these are leading the crypto market. Bitcoin dropped by 2.28%, Ethereum by 10.73% and the Ripple by 14.50% at this moment, but this drop could be only temporary if the near-term support levels will hold and will stop the bearish momentum.
Bitcoin drops after the yesterday’s impressive rally and could invalidate a further increase at this moment. It has found strong resistance right above the 350% Fibonacci line (descending dotted line), above the 23.6% retracement level and above the 50% Fibonacci line. A minor decrease was somehow expected after the breakout above the WL2 of the descending pitchfork. So, a false breakout above the mentioned resistance levels will send the rate down again in the short term as expected.
Only a valid breakout above the 50% Fibonacci line, the 350% Fibonacci line, and the 23.6% level will really confirm a broader upside movement towards the 12000 and 15000 levels.
ETH/USD plunged after the false breakout above the 150% Fibonacci line. Price is pressuring the 50% Fibonacci line and could drop towards the 565.44 static support and towards the upper median line (UML).
The crucial downside obstacle is represented by the lower median line (lml) of the ascending pitchfork. Only a breakdown below it will invalidate a further increase on the Daily chart. A corrective phase was expected after the impressive rally and after the breakout above the upper median line (UML) of the descending pitchfork.
The Ripple registered a massive drop today but will be very important where will close the trading session. It has dropped as much as 0.49010, but it has squeezed in the last hours and now is trading at 0.79212.
Yesterday’s false breakout above the 23.6% retracement level and above the 50% Fibonacci line has sent the rate down. This is the second false breakout above the 50% Fibonacci line signaling a major exhaustion.
Technically, the major cryptocurrencies have reached some very strong supply areas and now could come down to test and retest the downside obstacles. The rates could decrease and could also start a sideways movement because they need to recapture more bullish energy before will really start a medium to the long-term upside movement.