Market Update

Key points

Percentages reflect the past 7 days

Overview

The last week has proven to be a substantial reality check for investors and traders who were celebrating what they hoped was the bottom of the current bearish trend only to have their momentum stopped dead in its track with a sudden sell-off. After failing to break resistance at $7400, BTC fell off sharply along with the rest off the market, turning the bullish sentiment bearish overnight. With current prices trading in the 6200-6400 range. A long term bullish reversal was invalidated by this current move and we still remain bearish according to technical indicators. BTC is likely to test supports in the 5800-6000 price range before we see a shift in momentum. Although short rallies are likely, they are not expected to pull through before we’ve confidently tested the lower support levels once more.

As usual with these large BTC moves, it has caused another sell-off among altcoins and the overall market saw a larger fall compared to BTC. Some coins are weathering the storm and show surprising resistance, but altcoins remain a much riskier investment than Bitcoin.

Read on for an update on Bitcoin and Ethereum, as well as a few select altcoins that might buck the short-term bearish trend.

Bitcoin

Bitcoin failed to break out of the descending triangle after it had established a higher low in mid-August. The rally we saw from the $6000 bottom saw a much more slow and steady increase than previous bounces before failing to solidify itself above $7000. The sell-off was short and brutal, and while some blamed the fake news about Goldman Sachs dropping their bitcoin trading desk, others look to the eerily timed awakening of a supposed Silk Road wallet moving funds to Binance and Bitfinex. Nevertheless, after the price drop, the EMA Ribbon turned bearish and momentum now favours the bears. A relief rally to $6600 is in play, but a rejection by the ribbon is the most likely outcome. Prices are expected to test the lower support of $5800 with a possible wick on the daily extending as far as $5400. As Bitcoin has shown to be in large demand in these price ranges, a long position from here up to the 6800-6900 range is a likely play as it retests the descending trendline. However, if the demand in the 5400-5800 range is not able to meet the selling pressure, we can’t rule out a move below 5000 in the short term.

Ethereum
Ethereum has seen the worst sell-off in the last week among the top cryptocurrencies, and with the current outlook, we are expecting a full 100% retracement on the rally that started in December 2017. A 19% fall from current prices. This downtrend happened due to Ethereum being used as the major funding platform for ICOs in 2017 and 2018, vast amounts of funds were raised with its token. As these projects now look to sell their funds they are met with low demand in a relatively illiquid market. Sell pressure is not likely to dissipate soon. Furthermore, Ethereum’s shorts against it reached an all-time-high. While a scenario like this usually screams for a short squeeze, it has not resulted in one so far.

ETH seems to have overextended slightly on the last leg down and is seeing a small pause in the current range. Its price could retest the EMA ribbon before continuing down. However, don’t be fooled by small relief rallies in the short term. We’d need a convincing break above the ribbon to rule out any fakeouts of the current downtrend. We are very likely to see the continuation of this downtrend.

Stellar

Stellar has been a relatively stable coin in recent weeks. While it is seeing lower highs, its support remain unbroken. XLM has been trading in a decent range for the past week, and the retest of the trendline support could be a good entry for the short-term. A full 100% retrace on the recent rally would be the next entry if the current supports fails to hold. Be mindful of BTC volatility as any moves down is likely to invalidate any specific entries.

DASH

Dash is a small surprise in the current market due to how it’s working hard against the current bearish trends found elsewhere. Behind this price movement is a very strong fundamental case to be made for Dash. The cryptocurrency has been garnering some attention for what seems to be considerable merchant adoption in Venezuela. Anyone who have been in crypto for a while will recognise that this is where this technology really shines. It’s perfect for countries like Venezuela where Dash is making a major push for adoption. It has been given a lot of criticism for being a for-profit project, but this also means that the Dash Core Group can make very focused marketing and business development efforts in places like this.

Dash is currently trading above the Daily EMA Ribbon after failing to break through it once. It’s currently testing the resistance at the 100 MA. The trend has yet to regain a bullish bias, but Dash’s reversal seems to have more than just technical legs to stand on. If the 100 MA breaks we might see a consolidation around the range around 0.035 sats before we see another move up to test the 200 MA. Although, it is likely to retest the Ribbon support before it retests the 100 MA. Anyone looking to enter at current prices should be using a tight stop loss and look the enter again at the ribbon if prices break down again.

Wrapping up

With Bitcoin starting off the month like this, anyone looking to enter trades should be looking for short term ones or wait out the volatility of BTC. While sentiment was initially bullish, there is considerable uncertainty dominating right now. Weekly trends show that when the market falls, BTC is the one likely to fall the least which means any alt position you hold or decide to open is going to be more detrimental to you then if you decided to hold Bitcoin. However, as August showed us, the market is far from dead, but any experienced trader should be aware that you can never guarantee any specific month is one where you can make money. When you look back on a year you might see that you managed to make 80% of your profits in just a third of the months.

Ironwood’s weekly market updates takes aim to give a relatively short but valuable update for traders and investors every week. However, due to its nature it runs the risk of not being 100% up to date when it goes live. Be sure to head over to our Discord for the most up to date signals and discussions, we look forward to seeing you there.