A massive capital inflow triggered a rally felt through the entire market. Now, led by Bitcoin, Ethereum, and XRP the market seems prepared to enter another bull run.
Bitcoin Outlook After $8,500
Based on the 1-week chart, several technical indicators reveal that Bitcoin is extremely bullish.
First, a golden cross formed during the first week of Dec. 2019. This technical pattern developed as the 50-week moving average crossed above the 100-week moving average. Some of the most prominent technical analysts in the space see this pattern as one of the most definitive buy signals, indicating the potential for another rally.
The last time Bitcoin experienced a golden cross between its 50 and 100-week MA was in May 2016. Following the moving average crossover, BTC skyrocketed over 44x. The flagship cryptocurrency went from trading at a low of $436.5 to an all-time high of $19,890 on Dec. 2017.
Second, the parabolic stop and reverse, or “SAR,” presented a buy signal last week. Every time the stop and reversal points move below the price of an asset, it is considered to be a positive sign. Such a bullish formation indicates that the direction of Bitcoin’s trend changed from bearish to bullish.
This is the first time since March 2019 that the stop and reversal system turned bullish. During that time, Bitcoin surged nearly 250% after the parabolic SAR presented the bullish signal.
Finally, the TD sequential indicator is currently on a green two candlestick. This technical index estimates that the moment a green two candlestick starts trading above a preceding green one candle, a buy signal is given. Now, Bitcoin could surge for another two to seven weeks before it finds an exhaustion point.
If the pioneer cryptocurrency is able to close the week above the 50% Fibonacci retracement level, it could surge to the next level of resistance around the 38.2% Fibonacci retracement level at $9,700. However, failing to close above this price hurdle could trigger a correction to the 61.8% Fibonacci retracement level before the continuation of the bullish trend.
Ethereum Finds Price Relief
From a long-term perspective, Ethereum is also looking bullish. The recent touch of the lower Bollinger band on the 1-week chart allowed ETH to rebound. Now, this crypto surged to test the resistance given by the middle Bollinger band (21-week moving average). A further increase in volume could lead to a move up to the upper band.
Based on the moving averages, the recent bullish impulse took Ethereum above the 7-week MA, which is a bullish sign. As long as Ethereum keeps trading above this moving average its uptrend will remain intact.
It is worth noting that a death cross formed on ETH’s 1-week chart. This technical pattern developed when the 30-day moving average crossed below the 50-day moving average. Death crosses are indicative of trend changes from bullish to bearish and estimate further declines. However, this is a lagging indicator that could reflect the bearish trend that took ETH down 68% since June 2019.
Despite the significance of this bearish formation, the TD sequential presented a buy signal. The moment the current green two candlestick began trading above the preceding green one candlestick, the probabilities for an upward advance increased.
A spike in the buying pressure behind ETH could take it to test the 61.8% Fibonacci retracement level at $190. Breaking above this price hurdle would likely allow this crypto to make higher highs for the first time since June 2019. On the upside, Ethereum could face resistance around $223, $256, and $297.
Nevertheless, if this cryptocurrency moves below the 7-week moving average it could invalidate the bullish outlook and add credibility to the death cross. Such a bearish impulse may push the price of Ethereum down to the 78.6% or 93.6% Fibonacci retracement level. These levels sit at $143 and $101, respectively.
XRP Breaks Out of Downtrend
The TD sequential indicator presented a buy signal in the form of a red nine on XRP’s 1-week chart. This bullish pattern estimates that this cryptocurrency could be preparing for a rally that could last one to four weeks. Nonetheless, if the volume behind XRP is high enough it could even start a new bullish countdown. The setup trendline predicts that there could be a significant level of resistance around $0.28.
Additionally, the moving average convergence divergence, or MACD, is trending up. If the bullish momentum continues the MACD could soon turn bullish, adding credence to a further advance. This technical indicator follows the path of a trend and calculates its momentum. If the 12-day EMA crosses above the 26-day EMA, the odds for a further upward push increases.
If XRP is able to gain the $0.24 resistance level as support, it could try to rise to test the next level of resistance at $0.30. If this cryptocurrency is indeed about to enter an uptrend, the next resistance levels to watch out for sit at $0.38 and $0.47.
However, if the $0.24 resistance level continues to contain the price of XRP from a further advance, this cryptocurrency could retest the $0.20 support level.
Over the last day the top three cryptocurrencies have led the charge, with the overall market growing over $21 billion, or 10%, most coming from the aforementioned coins. From a short-term perspective, a retracement could be expected before the continuation of the bullish trend.
If Bitcoin, Ethereum, and XRP are indeed bound for a small correction, sideliners could take advantage of this opportunity and enter the market. As capital continues to flow into the markets and push these cryptocurrencies above old resistance to build new support, renewed local highs may kickoff 2020.