Facebook has launched its whitepaper. How can this affect cryptocurrencies in the short term?
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Facebook released the white paper for its cryptocurrency project on June 18. The researchers at Binance research opine that Facebook’s Libra can boost cryptocurrency volume “due to increased accessibility from both institutional players and everyday retail users.” While the researchers have pointed to the huge potential of Libra, they have raised concern that regulators and financial institutions might act as obstacles.
The Minister of the Economy and Finance, Bruno Le Maire said that he would “ask for guarantees” from Facebook to ensure that the stablecoin is not used for unlawful activities. However, the project found some support from Mark Carney, governor of the Bank of England who said that Libra might have genuine use cases if it meets regulatory standards. David Marcus, head of blockchain at Facebook has said that the Libra project will share data with the authorities to comply with regulations and for crime prevention.
While this news is positive in the long term, it is likely to have a limited effect in the short term. So, what should traders do now? Buy or wait for a dip? Let’s analyze the charts.
Bitcoin (BTC) remains in a strong uptrend. Both the moving averages are sloping up and the RSI is close to the overbought zone. This suggests that the bulls have the upper hand. The next target to watch on the upside is $10,000.
We anticipate strong selling close to $10,000 because it is a psychological resistance. It is also the level from where the BTC/USD pair had turned down at the end of April 2018. The resistance line of the ascending channel is also close to this level.
A pullback is likely to find support at the 20-day EMA and below it at the support line of the ascending channel. If theses supports break, the fall can extend to $7413.46, below which the short-term trend will turn negative. The only bearish development on the chart is a minor negative divergence on the RSI. However, if the bulls scale $10,000, the next level to watch on the upside is $12,000.
Ethereum (ETH) is consolidating between $225.39 and $280 since May 16. Repeated attempts by the bulls to break out of the range have failed to find buyers at higher levels. Though the price rose above $280 on June 16 and 17, the bulls could not sustain it. However, with both the moving averages sloping up and the RSI in the positive zone, we expect the bulls to make another attempt to breakout of the consolidation.
If successful, the ETH/USD pair can rally to $322.06 and above it to $335. We anticipate this zone to offer a stiff resistance. On the other hand, if the pair fails to scale above the range, it will continue to consolidate for a few more days. The trend will turn negative on a breakdown of $225.39.
Ripple (XRP) continues to trade inside the symmetrical triangle as the attempt to break out of it failed on June 17 and 18. It has since then corrected to the 20-day EMA, which has started to turn up. If the price stays above the 20-day EMA, we expect the bulls to make another attempt to break out of the triangle. If successful, it can rally to $0.57259 and above it to $0.6250.
Contrary to our assumption, if the XRP/USD pair plunges below the 20-day EMA, it can slide to the trendline of the symmetrical triangle. A breakdown of this level will signal weakness and can drag the price lower. Therefore, traders can keep the stop loss on the long position at $0.37. Profits on about 40% of the positions can be booked closer to $0.45 if the next attempt to ascend it fails.
Litecoin (LTC) has been consolidating near the overhead resistance for the past few days. In a strong uptrend, when the pullbacks are shallow, it is usually an indication that further upside is likely. Both the moving averages are trending up and the RSI is close to the overbought zone, which suggests that the bulls are firmly in the driver’s seat.
If the LTC/USD pair breaks out and closes (UTC time frame) above $143.3047, it can rally to $158.91 and above it to $184.7949. Therefore, traders can continue to trail the stops on the remaining long position below 20-day EMA. As the price moves up, we might suggest to tighten the stops further.
A breakdown of the 20-day EMA will be the first indication that momentum is weakening. The trend will turn down on a breakdown and close below the support line of the ascending channel.
Bitcoin Cash (BCH) is struggling to stay above the 20-day EMA. This shows a lack of demand at higher levels. The 20-day EMA is flattening out and the RSI is also close to 50. This points to range bound action in the short term.
If the BCH/USD pair slides below the 20-day EMA, it can drop to the 50-day SMA. We anticipate strong support between $360 and the 50-day SMA. A breakdown of this support zone can drag the pair to the support line of the ascending channel. The trend will turn negative on a breakdown of the channel.
On the upside, a breakout of the $440–$451 resistance zone can propel the price to $481.99. The resistance line of the channel is just above this level, hence, we expect it to act as a strong barrier. If the bulls scale this resistance zone, the pair is likely to pick up momentum.
EOS could not pick up momentum after breaking out of the overhead resistance of $6.8299, which is a bearish sign. It shows a lack of buyers at higher levels. The 20-day EMA is flattening out and the RSI is close to the midpoint. This shows a balance between bulls and bears.
Currently, the bulls are attempting to hold the price above the 20-day EMA. If it can move above $7.2691, a rally to the resistance line of the channel is probable. If this level is crossed, then the next target to watch is $8.6503.
Contrary to our expectation, if the bears sink the EOS/USD pair below the 20-day EMA, it can dip to the 50-day SMA. The zone between the support line of the channel and 50-day SMA is critical because if it breaks down, the pair can plunge to $4.4930. Therefore, traders who hold long positions can retain the stop loss at $5.80.
Binance Coin (BNB) is attempting to resume its uptrend. Both the moving averages are gradually moving up and the RSI is above 50, which shows that the bulls have the advantage. We anticipate another attempt to break out of the overhead resistance of $38.6463356. If successful, the uptrend will resume and the next target to watch is $46.1645899.
On the other hand, if the BNB/USD pair fails to rise above $38.6463356, it might correct to the 20-day EMA. If this support breaks down, the next level to watch is the 50-day SMA. Another possibility is that the pair remains range bound between $28 and $38.6463356 for a few days. The trend will turn down if the bears sink the price below $28. For now, traders can protect their long position with the stop at $28. We will trail the stops higher in a couple of days.
Bitcoin SV (BSV) is consolidating in an uptrend. Both the moving averages are sloping up and the RSI is close to the overbought zone, which suggests that the bulls have the upper hand. Currently, the bulls are facing minor resistance at $237.390 but the positive thing is that it has not given up much ground.
The BSV/USD pair formed an inside day candlestick pattern yesterday, which shows equilibrium between bulls and bears. If the bulls can push the price above $237.390, a move to $254 is likely. If this level is scaled, the pair will pick up momentum and rally to $307.789. Above this level, the next level to watch is $340.248.
Conversely, if the pair fails to break out of the overhead resistances, it might remain range-bound for a few days. The trend will turn bearish on a breakdown and close below $176.083, which is the 38.2% Fibonacci retracement level of the recent rally.
Stellar (XLM) continues to trade inside the descending triangle. The 20-day EMA is flat and the RSI is just below 50, which points to a consolidation in the short term. A breakdown of the triangle will complete the bearish pattern that has a target objective of $0.06678607. However, there is strong support at $0.0855 and below it at the lows.
Conversely, if the bulls scale above the downtrend line of the triangle, it will invalidate the bearish setup and can carry the XLM/USD pair to $0.14861760. The inverse head and shoulders pattern will complete on a breakout and close above $0.14861760, which has a target objective of $0.22466773. As the risk to reward ratio is attractive, we retain the buy recommendation given in the previous analysis.
Cardano (ADA) has pulled back to the 20-day EMA, which is acting as a strong support. If this level cracks, the cryptocurrency might enter into a consolidation between $0.076254 and $0.10. A breakdown of this range can sink it to $0.057898.
Currently, both the moving averages are gradually sloping up and the RSI is close to the midpoint, which suggests that bulls have a slight advantage. A breakout and close (UTC time frame) above $0.10 will complete a reversal pattern that has target objective of $0.22466773. Traders can look to initiate long positions on the ADA/USD pair as recommended in an earlier analysis.