XEM, Ripple, Stellar, Bitcoin, IOTA

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The market data is provided by the HitBTC exchange.

This week, the focus was on the Bitcoin Cash (BCH) hard fork and the ugly bickering between the warring factions. This led to a dent in the sentiment, and many believe this to be the reason for the sudden drop in crypto prices on November 14. The fall has been severe and has dragged several cryptocurrencies to new year-to-date lows, breaking below critical support levels.

This is a big sentiment breaker as the technical picture on most digital currencies has worsened and will take a lot of time and effort to rectify. This mayhem also led to new placings in the top five cryptocurrencies in terms of market capitalization.

So, after the fall, should investors view this as a buying opportunity, or should they wait for the decline to end and a trend reversal to take place before initiating any long positions? Let’s find out.

XEM/USD

We — usually — stick to cryptocurrencies that have a market capitalization of $1 billion and higher. However, we made an exception this week because, among the sea of red in the top 20 cryptocurrencies, the New Economy Movement stands out, as it is the only one that has fallen the least in the past seven days and keeps oscillating into the green once in a while.

The digital currency received a boost as Japanese crypto exchange Coincheck resumed NEM (XEM) trading for the first time since the infamous hack when $534 million worth of NEM was stolen on Jan. 26 of this year. This news resulted in a rally of about 35 percent on Nov. 12 and 13. So, what do the charts forecast? Is there room for a further rally?

The digital currency is currently trading 95 percent below its lifetime highs of 2.14676437 hit on Jan. 4 of this year. Due to the huge fall, it’s difficult to analyze the weekly chart; thus, we are using the daily chart for our analysis.

Since early-August, the XEM/USD pair is trading inside the range of $0.13125258-$0.081984. The moving averages are flat and the RSI has just dipped into the negative territory. This points to a continuation of the range bound action for a few more days.

The downtrend will resume if the bears succeed in the breaking down of the range. In such a case, the fall can extend to $0.05. On the upside, a new uptrend will start when the bulls sustain above this range. Traders should wait for the price to sustain above $0.13125258 before buying. The first target can be a rally to $0.2.

XRP/USD

In the recent fall, we have a new leader for altcoins: Ripple (XRP) has displaced Ethereum (ETH) and taken over the mantle of the second largest cryptocurrency by market capitalization.

A Malaysian bank, CIMB, partnered with Ripple for cross-border remittances. With this partnership, Ripple is targeting a pie of the large inbound remittance payments in the ASEAN region. Ripple’s CEO Brad Garlinghouse also pointed that it is likely to become the default international payments processor by dethroning SWIFT. The news has been viewed by the market participants as positive, limiting the damage to its price. Let’s see, what do the charts forecast?

The XRP/USD pair has not given up much ground, which is a positive sign. This shows that the bulls are keen to lap it up on declines. It is currently holding the small uptrend line. A break of this line will sink prices to the bottom of the range at $0.24508.

If the line holds, the digital currency is likely to rise to the top of the range at $0.76440. A breakout of this resistance might start a new uptrend, which has a pattern target of $1.28372. There is a minor resistance at $0.96490, but we expect this to be crossed.

XLM/USD

Stellar (XLM) has displaced EOS to take its place among the top five digital currencies by market capitalization. Its listing on Bithumb was cheered by the markets, helping it recover its intraday losses. In another news, messenger app maker Kik has shifted from Ethereum to Stellar for developing its cryptocurrency, dubbed kin.

The XLM/USD pair broke out of the descending triangle pattern in the week before, which is a bullish sign. However, the decline in the last week has pulled it back to the downtrend line. If the bulls hold this support and bounce back, we expect the digital currency to pick up momentum above $0.305. The upward targets are $0.36 and $0.47.

However, if the bears push prices back into the triangle, it will drop to the critical support at $0.184. Any break of this level will be negative and can result in the resumption of the downtrend.

BTC/USD

After more than two months of low volatility, the range expanded to the downside last week, plunging Bitcoin to new year-to-date lows. In doing so, it broke below a descending triangle pattern, which is a bearish sign. Its market cap has also dipped below the $100 billion mark, its lowest level in a year. Several analysts pointed to the hard fork in Bitcoin Cash as the trigger for the fall. After the break of the $5,900 support, analysts have a target of as low as $1,500 on the virtual currency.

However, Tom Lee, co-founder of Fundstrat Global Advisors, still has a high year-end target of $15,000 on Bitcoin. Though the new target is down from his previous $25,000, it is still about 167 percent higher from the current price. But what do the charts forecast?

The BTC/USD pair has broken down from the critical support at $5,900 and is sustaining below it. If the price closes the week below $5,900, the fall can extend to the first support at $5,450 and below that to $5,000. The pattern target of the breakdown of the tight range $6,832-$5,900 comes to $4,968. Hence, we anticipate a strong support close to $5,000.  

Our bearish view will be invalidated if buyers carry prices above the breakdown zone of $5,900-$6,075. If the digital currency sustains above this zone, it will suggest large-scale buying at lower levels. The trend will change if the bulls scale $6,832. In such a case, we anticipate the rally to push prices to $8,400 and above that to $10,000. Bottom fishing, especially when prices are reeling near year-to-date lows, is a risky strategy and should be avoided.

IOTA/USD

This week, the carnage has been so bad that even digital currencies that have fallen in double digits have qualified as the top 5 performers. The IOTA Foundation recently announced the hiring of a business developer, Pierre Hoffman, a former employee of Microsoft and TOTAL. With his experience, the foundation expects to strengthen its presence in the European markets. During the week, electronics giant Bosch and IOTA also announced a partnership to launch a data collection product for the Internet of Things (IoT).

After remaining range bound for four weeks, the IOT/USD pair broke down to new 52-week lows of $0.3501. However, the lower levels saw some buying, pushing prices above the support at $0.4037. If the bulls hold this support, the digital currency might attempt to move up to $0.50 and above it to $0.61. We believe that any fresh positions should be taken only after a trend reversal is signaled.

On the downside, if the bears sink prices below the recent lows of $0.3501, a fall to $0.32 is likely. Below this support, the drop can extend to $0.1767-$0.1427.

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