Dear Monfex Traders!
We're providing you with an advanced technical analysis for BTC/USD and ETH/USD. Keep reading for an expert, professional basis for making trading decisions over the next week!
On a daily timeframe for BTC/USD, technical analysis tools generate an upward trend recommendation with the forecast horizon of 1 week. Technical indicators and chart patterns indicate an accelerating trend upwards and there are no signals of a possible trend reversal currently.
Take-profit and stop-loss targets
In terms of targets, we recommend placing take-profit orders for long positions at $4,250 (for short-term scalpers) and at $4,500 (for medium-term traders). These prices are considered to be signifiant resistance levels based on historical price dynamics, therefore, setting take-profits at $4,250 and $4,500 is expected to maximize the profitability of short-term trades.
Stop-losses for long positions should be placed at $3,900. This price level is currently considered to be a significant support. If market price breaks down through $3,900, we expect the medium-term trend to change downwards and the price to continue declining.
Take-profit and stop-loss orders are very important for the lasting success and profitability in trading, and we highly recommend using them for risk-management purposes.
We use a 30-day exponential moving average to estimate the direction of trend. The EMA(30) is growing (is upward sloping). This means that the medium-term trend with the forecast horizon of approx. 1 week is upwards. A quicker moving average, such as an EMA(7), is growing as well and the difference between the two moving averages is expanding (MACD indicator is increasing). This implies that the upward trend is accelerating.
The overall trend analysis indicates that, technically, now is a good timing to enter long (to buy) BTC/USD.
Volatility indicators (oscillators)
The ability to read the signals from oscillators is important for correct timing of market entry and exit points. For this purpose, in the next paragraph we discuss the current technical position of the Stochastic oscillator (5,3,3).
The Stoch(5,3,3), plotted on a daily timeframe, has achieved an overbought range and the main line has crossed the signal line downwards. Technically, this means that the short-term correction downwards is possible. We cannot estimate the exact probability that this correction will happen, and, more importantly, there are no signals of a possible trend reversal at this point. Highly conservative traders should wait until the Stoch achieves an oversold range and the main line turns upward again.
On an hourly chart we got a chart pattern very powerful in terms of its forecasting ability and a potential price action - an ascending trend channel. Importantly, this channel originated back on February 8, and its trendlines have been successfully tested by the market on four occasions - in other words, this channel approximates the current trend reasonably well.
We believe that over the medium-term the price will be increasing within the bounds of this channel. The upper trendline of this channel confirms the take-profit target at $4,500, and the lower one confirms the stop-loss level at $3,900, mentioned above.
On ETH/USD, technical situation is very similar to the one that we have on BTC/USD - the trend is upward and is accelerating. Basically, almost everything that we’ve described for BTC/USD in terms of technical analysis applies equally to ETH/USD, since the two cryptocurrency pairs correlate with each other strongly. However, there is a particular chart pattern being formed on ETH/USD that deserve special consideration - an ascending triangle.
In an ascending triangle, as shown on the chart above, the trendline connecting the high prices is horizontal at $160 and the trendline connecting the low prices forms an uptrend. The triangle itself encompasses a 4-month period, which means that it is meaningful.
What this pattern means is that market participants have been selling ETH/USD on two occasions over the 4-month period, when the market price approached the $160 level, thus putting a halt to rallies at the same price point. At the same time, we are seeing that buyers are getting more and more bullish and stepping in at increasingly higher prices to halt sell-offs instead of waiting for further price declines.
An ascending triangle implies that ETH/USD is currently in an uptrend. If the market price breaks through the $160 resistance, this will confirm that an upward rally is expected to continue and will generate a clear bullish signal.
This report is for information purposes only and should not be considered a solicitation to buy or sell any cryptocurrency or cryptocurrency product. Monfex accepts no responsibility for any consequences resulting from the use of this material. No representation or warranty is given as to the accuracy, timeliness, or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.