Technical analysis of this week’s crypto trading market

Crypto traders will brace for a split sentiment in the crypto space as they start a fresh trading week. The prices of bitcoin continue to consolidate in the 8200 area, while some of the altcoins have been attempting to reclaim their recent highs.

On the bright side, we’ve seen data shows that institutional investors have been increasing their long positions in bitcoin, along with the positive developments in the equities markets, the macro environment could provide adequate support for bitcoin staying at the current level. However, we need to see more evidence to confirm if a new trend has been developed.

News-wise, China seems has downplayed the US-China trade talks outcome, describing the results “wary but welcoming”. Economists believe that the partial trade deal is an “uncertain” arrangement and there does not appear to be a viable path to reduce existing tariffs. In other words, the truce is unlikely to reverse market sentiment in the long term, and that could have underlying negative effects on bitcoin.

What you missed

  • Facebook’s Libra faces more headwinds from global regulators. BBC reports that G7 nations have drafted a report saying that Libra could pose a risk to the global financial system, and the company should not release it until it proves it’s safe and secure. The news comes just days after payments giants Mastercard and Visa pulled out of the Libra project due to regulatory concerns.
  • In the US, the SEC has filed an emergency action and obtained a temporary restraining order to halt the 1.7 billion USD token sales from Telegram Group and its subsidiary TON. The SEC says the companies failed to provide investors with information regarding their business operations, financial condition, risk factors, and management that the securities laws require.
  • China Construction Bank upgrades its blockchain trade finance platform, as the trade volume reached over 53 billion USD. The bank says the enhancements will able to help more Chinese exporters and the company is committed to investing more in technology innovations.

Price Analysis

BTCUSDT

  • The pair has produced some higher lows on the daily chart last week (figure 1) and reclaimed the 20-day moving average area (around 8215) very slowly.
  • The squeeze in the Bollinger bands suggests that volatility may increase in the near term, but the volume divergent could indicate that there’s an only limited short-term upside.
  • OKEx’s BTC Long/Short Ratio remained at a low level, generally
  • The COT Summary (figure 3) highlights the split sentiment in the markets. The data suggests that asset manager accounts have increased both long and short positions dramatically, while leveraged names slightly reduced their exposure, but this category still has held most of the short positions.
Figure 1: BTCUSDT Daily Chart (Source: OKEx; Tradingview)
Figure 2: OKEx’s Long/Short Ratio (Source: OKEx)
Figure 3: Bitcoin COT Summary (Source: CME)

XRPUSDT

  • XRPUSDT is an interesting pair to look at. As OKEx Technicals explained previously, the pair has been developing a bullish flag formation since early October, and apparently, the second flag has been completed.
  • The pair seems to need more momentum to develop a third flagpole, as trade volume seems to lack behind, and that would be something XRP bulls should keep a close eye on.
Figure 4: XRPUSDT 4-Hour Chart (Source: OKEx; Tradingview)

ETHUSDT

  • This week could be a critical week for ETH traders as the ETHUSDT rally ran out of steam, resulted in a false breakout last week.
  • The stochastic oscillator suggests that the pair has entered the overbought zone during the rally last week and failed to have enough momentum to maintain its direction.
  • The pair could need more time to consolidate before another breakout attempt.
Figure 5: ETHUSDT Daily Chart (Source: OKEx; Tradingview)

ZRXUSDT

  • ZRX was one of the gainers in the Monday Asia session, it traded 11% higher against USDT at the time of writing.
  • However, some indicators suggest that the rally could come to an end. The RSI has already reached the overbought level, and we’ve seen cases of price correction followed suit previously (yellow circles).
  • Trade volume didn’t match the recent price actions. This also suggests the rally could be losing out momentum.
  • At the same time, the 0.3 area is the lows back in May and June, which could be turned into resistance.
Figure 6: ZRXUSDT Daily Chart (Source: OKEx; Tradingview)

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.


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