Prices don’t go up in a straight line! Following some hefty gains by Bitcoin and many altcoins, market is entering a phase of digestion, consolidation, and correction. All synonyms for traders taking some profits off the table.
But if Bitcoin keeps rising well into 2021, which we believe it will, driven by demand from PayPal’s user base (361M), institutional investors and corporations, then the bull cycle is far from over. Not to mention the debasement of all fiat currencies by Central Banks.
Traders should find strong Support Zones in the price charts and pick entry points if those support levels hold, ideally confirmed by an uptick in volumes (OBV).
Following is a technical analysis of some of the large cap cryptocurrencies: XEM, ATOM, OMG, DOGE, WAVES, and CEL.
XEM – Solid Uptrend with Momentum; Sitting at a Critical Support Level
XEM (NEM) is in a solid Uptrend across all time horizons (Short-, Medium-, Long-Term). XEM had a monstrous price action this week burning through two Resistance zones ($0.125 and $0.160), which now turned into Support zones. Today, along with the entire cryptocurrency market, XEM is seeing some retracement and so far seems to find Support around ~0.163, which was previously Resistance, although not a particularly strong level. Is uptrend over? XEM is still in a clear uptrend, with all major SMAs lined up in bullish formation (SMA50 higher than SMA100), providing support below. RSI is slightly overbought, but still trending positive, while a MACD Crossover (Buy signal) occurred on 23rd November. OBV (volume on Up days vs Down days) is clearly trending up, indicating strong demand from buyers. ADX at 36.6 suggests that current trend is very strong. We believe that there is a high chance that the price retraces all the way to $0.125-$0.140 Support Zone, where it could then resume its Uptrend.
ATOM – Got Rejected at $6, Again, Headed Back to Support
ATOM (Atomic Coin) is in a Neutral Long-Term trend but Medium- and Short-Term trends are Up. ATOM did not participate in this week’s massive altcoin rally. Recent momentum was not enough to break out of a sideways trading range, as price got rejected at the Resistance Zone around $6.00, again. It’s likely headed back to Support at $5.00. We continue to wait for a breakout, most likely Up but let’s wait. In the meantime, the Channel could be traded (Buy Support, Sell Resistance). Momentum is still solid (MACD Crossover and RSI > 50), and trend strength too (ADX > 20 and rising). On the negative side: 1) the recent price gains were not accompanied with strong volumes as indicated by flattish OBV (volume on Up days is lower than on Down days). Overall, there are more positives going for ATOM than negatives.
OMG – Is It Ready to Break Out of its Consolidation Range?
OMG (OmiseGo) is in a Neutral trend on a Long-Term basis, while Medium- and Short-term are Up. OMG experienced lots of action since May this year, a period of long consolidation until mid-August, then it went parabolic and produced a blow-off top at 10. Then it fell sharply by 75% and has been consolidating for two months since. MACD posted a buy signal on 6th November and price attempted to break through a $4.00-$4.40 Resistance Zone but it was unable to hold it. RSI is >50 (bullish momentum) and rising. OBV had a nice uptick recently, which suggests that demand from buyers is building. Major SMAs are losing width, reflecting the sideways Channel.
DOGE – Too High Too Soon; Correction and Consolidation to Follow a Failed Breakout; Still, Price has Laid a Path Higher
DOGE (DogeCoin) is in a Neutral trend on a Long-Term basis, while Medium- and Short-term are Up. After a Death Cross in October, SMA(50) is headed higher and traders should monitor whether it can cross above SMA(200), which would be a bullish Golden Cross trend indicator. Recently DOGE successfully broke out of a Sideway Channel’s resistance ~$0.0030, which now forms a Support Zone. The subsequent attempt to break a Resistance Zone at ~0.0035 quickly failed. Still, the price has now blazed a path for further gains if it consolidates above $0.0030. Bullish momentum is still here (MACD Crossover and RSI > 50), although diminishing, but that’s typical of corrections in an Uptrend. OBV (volume on Up days vs Down days) reached its highest point since May 11 and ADX is above >40, which means the current trend is very strong and is rising, which may indicate DOGE will attempt to break the resistance zone yet again.
WAVES – In a Correction Following Big Gains; Which Support Level Will Hold?
WAVES (Waves) is in a strong Uptrend across all time horizons (Shot-, Medium-, Long-Term). During October, price started making steady Higher Highs and Higher Lows, markings of solid Uptrend, then it broke through a $3.75 Resistance area and accelerated higher on good volume (OBV rising). The last sprint higher, however, was on thin ice, forming an RSI Divergence (Price rises but RSI declines). Perhaps that was a forewarning of momentum exhaustion. Price will now correct and consolidate, but it is unclear which Support Zones will hold: $6, $4.75 or $3.75. The price has already corrected 33%. WAVES produced some support zone on its way up, but couple of them appear weak ($6 and $4.75), since little volume exchanged hands there. $3.75 is a far more formidable Support Zone. Momentum is weakening now, as is typical during a consolidation phase.
CEL – Likely Just a Correction in a Steady Uptrend
CEL (Celsius) is in a Strong Uptrend across all time horizons. CEL was trading in a beautiful Channel Up, which it broke out of (up) but failed (Fake Breakout in chart below), and quickly reversed down through the Channel Support Trendline as well as Resistance zone at ~2.00. Despite of this, CEL remains solidly in an Uptrend: all major SMAs are below the price, and SMAs seem to expand from each other. Momentum (RSI, MACD) will diminish after today’s correction, and price will consolidate. A relatively strong Support exists at $2.00 but stronger at $1.50. OBV (volume on Up days vs Down days) is trending up, showing demand from Buyers is greater than supply from Sellers. ADX is indicating that current uptrend is very strong. All in all, price could return to the upward Channel. What would worry us would be if the price dipped below the prior swing low of $1.78, because that would break the string of Higher Highs and Higher Lows.
Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice. There are risks associated with investing in cryptocurrencies. Loss of principal is possible.