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After banning initial coin offerings last week, China is expected to ban trading of cryptocurrencies on domestic exchanges. This news has started a correction in the digital currencies.

It’s not the first time that China has meddled with cryptocurrencies. The market had briefly corrected when the Chinese exchanges halted withdrawals of digital currency in February of this year, and followed it up with an extension of the suspension in March. However, digital currencies continued their march northwards after a brief hiatus. Will the same story repeat again?

Let’s see what the charts forecast.

BTC/USD

Bitcoin moved opposite to our forecast, hitting our stop loss at $4400. The digital currency has broken below the ascending channel, thereby ending the upside momentum for the time being.

So, has Bitcoin become negative? No, not yet.

It is currently in a correction that can extend to $3749 levels, which is a 38.2 percent Fibonacci retracement of the rise from $1758.2 to $4980. The 50-day simple moving average support is at $3823. We expect Bitcoin to find some kind of support between these two levels.

However, until the digital currency stops falling and forms a short-term bottom, we will not give any buy recommendations. We don’t find any bearish patterns either, therefore, we are not recommending any short trade on the cryptocurrency.

ETH/USD

Ethereum also went against our forecast and stopped us out at $318. The digital currency has also broken down of the ascending channel, ending its uptrend. Currently, Ethereum is taking support at the $285 levels, just below the 38.2 percent Fibonacci retracement levels of the rise from $130.26 to $396.88.

A breakdown below $285 can extend the fall to $263 where it has a strong support. If this support also breaks, the cryptocurrency can fall to $232 levels, which is the 61.8 percent Fibonacci retracement level.

Though we see a downside opening up, the logical stop loss for the trade is at $310. The risk to reward ratio is not attractive, especially if Ethereum bounces from $263 levels. Therefore, we are not recommending any trade on it.

BCH/USD

Bitcoin Cash is moving according to our expectation. It has become range bound between $523 and $736. A breakdown below $523 will find some support at $470, below which the cryptocurrency will become bearish and can fall to $440 and thereafter to $310 levels.

On the other hand, a bounce from the $523 levels will keep the digital currency range bound, with a possibility of a rally to $634 and thereafter to $736 levels. However, this is a very risky trade, especially when most of the top cryptocurrencies are correcting. Therefore, even traders who attempt this trade should allocate only 25 percent of their normal position size.

XRP/USD

Ripple has been trading inside a descending triangle, which will complete on a breakdown and close below $0.193 levels. The pattern target of such a break is way lower at $0.085. However, the digital currency has a strong support at $0.13500, which hasn’t been breached on a closing basis since early May of this year. We expect this level to hold.

On the other hand, if ripple breaks out of the downtrend line of the triangle, it will invalidate the bearish pattern and a move to $0.30000 is likely, with a small resistance at $0.26500. Aggressive traders can buy on a breakout and close above $0.23500 and keep a SL of $0.19000.

However, ripple is not in a clear trend. Therefore, initiating any trade on it is risky. Traders who can quickly raise their stops and be disciplined should only attempt the trade. Please keep the position size small.

LTC/USD

Litecoin did not reach our buy trigger level of $83, therefore, our trade did not execute. It is currently taking support at the 61.8 percent Fibonacci retracement level of the rally from $42 to $98.

A breakdown below the $63 levels will be bearish for the digital currency, which can extend the fall to $54 and thereafter to $42 levels. Considering the bearish setup, we are not recommending any trade on it.