- Bitcoin prepares for a strong breakout that will depend on its ability to close above $9,400 or below $8,900.
- Ethereum flashed a buy signal that may see it rise towards $250.
- XRP continues to be rejected by the 200-day moving average, but the strength of this hurdle is weakening over time.
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Bitcoin, Ethereum, and XRP have been trading sideways despite last month’s altcoin frenzy. According to a handful of indicators, however, the top three cryptocurrencies may soon join the bullish action.
Bitcoin Prepares for High Volatility
The flagship cryptocurrency continues to disappoint investors as the trading range has continued to narrow over the past three months.
The lackluster price action forced one notable indicator, the Bollinger bands, to squeeze on BTC’s 1-day chart. This behavior indicates that momentum for a significant price movement is building up slowly.
The longer the squeeze, the higher the probability of a strong breakout.
However, the underlying support and overhead resistance are holding firm, making it impossible to identify where Bitcoin is headed next. Not only must Bitcoin overcome the Bollinger bands indicator, but it also faces both the 50- and 100-day moving averages.
Thus, only a candlestick close above the $9,400 resistance or below $8,900 support level will determine the direction of the trend.
Only a sudden spike in Bitcoin’s buying pressure would move the crypto across the resistance and see it rise towards the 61.8% or 78.6% Fibonacci retracement level.
These supply barriers sit at $10,160 and $11,900, respectively.
Conversely, Bitcoin might lose the $8,900 support level if sell orders pile up.
Breaking below this barrier would likely spark further selling, pushing BTC’s price down to the 200-day moving average or the 38.2% Fibonacci retracement level.
These critical areas of support are hovering around $8,600 and $7,750, respectively.
Ethereum Flashes Buy Signal
The smart contracts giant, Ethereum, has also endured a prolonged stagnation phase that began in June.
Throughout this time, Ether has mostly traded between $250 and $227 with little sign of significant change.
Nevertheless, the TD sequential indicator recently presented a buy signal on the daily chart that would allow ETH to retest the overhead resistance. The bullish formation developed in the form of a red nine candlestick. It estimates that ETH is bound for a one to four candlesticks upswing or the beginning of a new upward countdown.
The buy signal will be confirmed when the current green two candlestick begins trading above the preceding green one candle.
By confirming the buy signal presented by the TD setup, Ethereum may also validate the ascending triangle that has been forming over the past two months.
A horizontal line was created along with the swing highs while a rising trendline developed along with the swing lows.
If the buying pressure behind the second-largest cryptocurrency is strong enough, its price could shoot up 20% upon the break of the $250 resistance barrier. This target is determined by measuring the distance between the two highest points of the triangle and adding it to the breakout point.
On its way up, two key resistance levels could block Ether from achieving its upside potential.
These hurdles are the 61.8% and 78.6% Fibonacci retracement levels, which are sitting at $260 and $306, respectively.
It is worth noting that losing the hypotenuse of the triangle, as well as the 50% Fibonacci retracement level as support, will jeopardize the bullish outlook. Under such circumstances, investors must watch out for a spike in sell orders that can potentially push Ether towards the 38.2% Fibonacci retracement level at $195.
XRP Contained Within Critical Supply Walls
Like Bitcoin and Ethereum, Ripple’s XRP has offered few clues about future moves. Still, analyzing the 200- and 50-day moving averages can give investors a firm starting point.
The 200-day moving average has been rejecting the price of this cryptocurrency from advancing further since May. Meanwhile, the 50-day moving average has prevented it from a steep correction since the beginning of the month.
Until either of these barriers break, it is nearly impossible to tell whether or not XRP is poised to enter a new bullish cycle.
Therefore, investors must pay close to these moving averages as they sit right on top of the 78.6% and 61.8% Fibonacci retracement levels, respectively.
Closing above resistance could send XRP to May’s high of $0.24, while breaking below support may push it to $0.17.
The Crypto Market Moves Forward
The impressive run-up that some lower-cap altcoins have enjoyed over the past month has many market participants celebrating the arrival of a new altseason.
Historical data reveals that this does not seem to be the case, however, and what the market is experiencing is capital flowing between different tokens.
During the last altseason, BTC’s dominance plunged from 95% to 61.5% between March and May 2017. Then, it dropped to 50% two months later and bottomed out at 35% in January 2018.
Bitcoin currently holds a 64% market share and has hovered above this level since July 2019. Whenever BTC’s dominance breaks below 60%, and there is a notable spike in the entire market capitalization, it would be reasonable to assume that it is the beginning of a new altseason.
Until that happens, one can rest assured that the top three cryptocurrencies by market cap — Bitcoin, Ethereum, and XRP — still can regain investor’s interest and finally break out of the ongoing consolidation.