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Market data is provided by the HitBTC exchange.

In December of last year, market participants were rejoicing as cryptocurrencies led by Bitcoin were soaring. The leading digital currency reached a high of close to $20,000 on Dec. 17 and investors were hoping for even higher levels.

A year later, after a massive bear market, the question in every investor’s mind is, can Bitcoin rise from the dead once again and stage a turnaround? While we believe that Bitcoin is closer to a bottom than ever, we do not expect a sharp rally from current levels. There is a huge overhang of positions that will liquidate when the virtual currency attempts a recovery. Hence, it will be a slow and laborious move higher.

Fundamental factors like actual utility, clear regulations and wider adoption of the technology will attract institutional investors who will drive the next leg up. All of this will require time and will not happen overnight. BitPay CEO Stephen Pair believes that it will take 3-5 years for blockchain-based currencies to be used in daily transactions. Therefore, investors should have a long-term horizon and not expect overnight riches.

Note: There is an opportunity for a short-term trade on a few cryptocurrencies. However, these are all countertrend trades because the trend on most of them is down. Therefore, traders should keep the position size small, about 30 percent of the usual and trade with a trailing stop to reduce the risk. They should take partial profits at resistances and trail the stops on the remaining positions to protect any paper profits. Long-term investors, however, can hold their positions.

BTC/USD

Bitcoin is trying to pull back from the $3,500–$3,000 support zone. In this leg of the down move that started on Nov. 14, the pullbacks have not lasted more than three days. Hence, we remain cautious.

The downtrend line and the 20-day EMA are both placed at the same level. Therefore, we anticipate it to act as a major roadblock. If the bulls push prices above the 20-day EMA, the recovery can extend to $4,500 and above it to the $5,000 level. The major trend remains down. Therefore, we are not confirming a bottom yet. After the initial pullback, the next leg down will confirm whether the bottom is in place or if the BTC/USD pair has farther to go on the downside.

Our bullish view will be invalidated if the price turns down from the downtrend line and slumps below the Dec. 15 low of $3,236.09. Traders who are long can hold on to their positions. Depending on the performance at higher levels, we shall propose either adding or reducing the positions.

XRP/USD

Ripple has again held the support line of the descending channel. It has bounced sharply and is likely to reach the 20-day EMA.

Above the 20-day EMA and $0.33108, the recovery can extend to the next overhead resistance of $0.40. We expect the bears to defend this level strongly. However, if the bulls scale $0.40, a move to the top of the channel at $0.50 is probable.

Our bullish view will be invalidated if the price turns down from the overhead resistance. In such a case, a fall to $0.24508 is probable. Traders can hold their long positions on the XRP/USD pair.

ETH/USD

The current pullback in Ethereum can reach close to $102.50, which might act as a stiff resistance.

If the bulls sustain above the 20-day EMA, a move to $136.12 is possible. However, if the ETH/USD pair turns down from $102.50, it can slip back to $83. The 20-day EMA is showing signs of flattening out, which points to a consolidation. The RSI has also formed a positive divergence, which increases the probability of a recovery. Traders can wait for the digital currency to sustain above $103 to trade on the long side.

XLM/USD

Stellar is attempting to recover after forming a new yearly low of $0.09285498 on Dec. 15. The pullback can reach the 20-day EMA, which is likely to offer a stiff resistance. If the bulls scale $0.13427050, the recovery can extend to $0.184, though we give it a very low probability of occurring.

There are no bullish patterns on the chart, barring the oversold condition of the RSI. Therefore, we have not suggested any trade on the XLM/USD pair. If the price fails to sustain the recovery, it can remain range bound for a few days. It will resume its downtrend below the Dec. 15 low.

EOS/USD

EOS is attempting to pullback after a sharp fall. Though the main trend is down, a short-term recovery is probable. The bulls might face resistance at the 20-day EMA.

On breaking out of the 20-day EMA, the EOS/USD pair can pull back to $3.0510 and $3.5147 — 38.2 percent and 50 percent of the retracement levels of the down move from $5.4793–$1.55.

If the bears push prices down from the 20-day EMA, the virtual currency can remain range bound for a few days. Aggressive traders can attempt long positions above the 20-day EMA, keeping a small stop.

LTC/USD

Litecoin is currently in a sharp pullback. It has risen above the 20-day EMA for the first time since Nov. 8. This shows buying at the lower levels.

We anticipate a strong resistance close to $29.349. If the bulls scale and sustain above it, a rally to the 50-day SMA is probable. The 20-day EMA is flattening out, which shows a likely change in the short-term trend. The positive divergence on the RSI is also a bullish sign.

Traders can wait for the price to sustain above $29.349 before attempting any long positions. If the bears defend the overhead resistance, the LTC/USD pair can retest the low at $23.090.

BCH/USD

Bitcoin Cash has been a huge underperformer. It slides sharply on a bearish sentiment and recovers marginally during a pullback.

We had expected the BCH/USD pair to fall to $72.39 and it reversed direction after forming a low at $73.50 on Dec. 15. The virtual currency has been extremely oversold for the past few days and a pullback is probable. However, a long trade on the virtual currency should be attempted only by professional traders.

The first level to watch on the upside is $115, above which a move to the 20-day EMA is possible. Notwithstanding, if the price turns down from $95, a retest of the low is probable.

BSV/USD

The breakdown of the range in Bitcoin SV found buyers at lower levels. This is a bullish sign. If the price re-enters the range, it will indicate that the market has rejected the lower levels.

Above $80.352, the BSV/USD pair can move up to the top of the range at $123.98. Traders can wait for the price to close (UTC time frame) above $80.352 to go long with stops kept just below the Dec. 15 low.

Our bullish view will be invalidated if the price turns down from $80.352 or the 20-day EMA and plummets below $65.031. In that case, a retest of $38.528 is probable.

TRX/USD

TRON is one of the outperformers, as it has successfully held above its Nov. 25 low. The price could not break out of the symmetrical triangle with force, invalidating the pattern.

Currently, the bulls are trying to scale the 20-day EMA, while the bears are trying to defend the level. If the bulls succeed, a move to the overhead resistance of $0.0183 is probable. The traders can wait for a close (UTC time frame) above the 20-day EMA and initiate long positions, keeping the recent lows as a stop. We are asking to wait for the close because on Nov. 29, the price rose above the moving average but could not close above it.

Contrary to our opinion, if the TRX/USD pair turns down from the 20-day EMA, it can again fall to the trendline and below it to $0.01176658.

ADA/USD

Cardano is showing the first signs of a pullback from the recent lows. The bulls will have to overcome a stiff resistance in the $0.033–$0.035 zone for the recovery to pick up momentum.

If the ADA/USD pair turns down from the 20-day EMA, it will remain range bound and the bears might again attempt to resume the downtrend. However, if the bulls sustain above $0.035, we anticipate a move to the top of the range at $0.0455.

Though the moving averages are still falling, the RSI is showing a positive divergence, which is a bullish indication. Short-term traders can wait for the price to sustain above the 20-day EMA to trade on the long side.

Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.