Cryptocurrency Market Outlook Feb. 5: Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, Litecoin, Stellar, NEO
by Jamie Holmes
BTCManager’s Weekly Cryptocurrency Outlook highlights the price action and technical indicators on a long-term basis to identify the best opportunities in the largest cryptocurrencies, such as bitcoin, ether, and others.
Bitcoin continues its downward move, breaching the $7,799.96 support level on February 5. Moreover, last week’s close was below the base line (red), suggesting the market will now head toward equilibrium as indicated by the Ichimoku cloud. Short-term equilibrium is suggested at $11,319.00 by the base line (red) and $13,585.84 by the conversion line (blue), and the fact that they have not turned downward yet could mean that the market is soon due for an upward move. The flat base/conversion lines generally attracts price action, acting like a magnet.
The next Fibonacci retracement level from the monthly Elliot wave is at $4999.65, while from the weekly timeframe’s Elliot wave, the next support zone is found at $6911.79. The Fibonacci level at $7799.96 now turns to resistance and we look for a weekly close above this level to give a slight bullish indication for the weeks ahead. Therefore, we look to buy around $6900 and $5000.
We see that momentum remains bearish, as the Awesome Oscillator is still red in color and is moving lower. We look for the bar to turn green next week for an early sign of a reversal and an attempt by bulls to retake control.
On February 6 (10 AM EST), the direction of the market may be more clear, as the chiefs of the CFTC and SEC attend a Senate hearing, which may give investors more clarity around the regulations and rules of investing in cryptocurrencies. Many market participants expect the news to affect the crypto market, which could provide a bullish reversal if investors are reassured about the regulatory landscape.
The daily chart shows that since posting a high at $11,989.15, the market has exhibited six near consecutive lower lows, suggesting that bearish exhaustion will soon follow. We expect three to five more lower lows on the daily timeframe, which are likely to pierce into the purple box shown in the graph below.
A daily close below $7625.25 will give more certainty of a continuation of the bearish trend, whereas a rejection of the fractal, i.e., a daily close above $7625.25, will be considered slightly bullish.
The purple box lies between $4999.65 and $6911.79, two important support levels. We also see that by applying the Fibonacci indicator to the most recent Elliot wave, i.e., from the fractal high at $11,989.15 to the fractal low at $7625.25, that the extension level lies at the bottom of the purple box at $4928.36. This suggests that $5000 will be the next important support zone and we look for a long-term reversal once the market enters this area.
While the Awesome Oscillator has been red for five weeks for BTC-USD, for ETH-USD, the momentum indicator has just switched color from green to red, suggesting the next few weeks will see more downside for ether.
The weekly chart below shows that the next support will be found around $650, the Fibonacci extension level which previously provided resistance. Further support is found at $404.99. The price action closed below the base line (red) last week, giving a weak bearish signal.
Using the Fibonacci for the most recent Elliot wave, we see that the only remaining support lies at $587.26.
The daily chart shows the near consecutive count for ETH-USD is at four since the high at $1,234.00. A failure to break below $734.84 on February 5 will invalidate the count and we would start again, since we would have no new low for three days since February 2 when $734.84 was reached. The count would then start again, opening up the possibility for higher highs. On the other hand, a break below $734.84 on February 5 would open up the support at $675.06 and possibly lead to losses over the next few days.
Ripple has continued to fall against bitcoin, with more losses expected as the weekly candlestick closed below the Ichimoku cloud on February 5. The fractal at 0.00008150 was almost tested over the past week, with a move below this level anticipated. The leverage for a downward move is large, as the next fractal support lies way down at 0.00001171
The Awesome Oscillator remains red this week, suggesting moves to the downside are more likely. Against the US Dollar, ripple looks to head toward the equilibrium zone as indicated by the Ichimoku cloud around $0.25.
Bitcoin cash has fallen through two important support levels at $1177.50 and $1100.10, with the next support indicated just above $327.72 by the lagging line (purple).
We anticipate Cardano (ADA) to continue downward, heading toward the support at 0.00002628 as shown below. The Ichimoku cloud has changed color from green to red, indicating a downward trend is getting underway. February 3 and 4 saw a test of the resistance at 0.00005150 but was rejected, giving more certainty that the altcoin will move lower.
The open of the bullish candlestick no longer provides support, suggesting the bullish trend for litecoin is invalidated. The support at $144.58 looks to be broken this week, with a weekly close lower than this level giving bearish confirmation. Another important support lies at $124.957, the 23.6 percent retracement level for the most recent Elliot wave. A weekly close below $124.957 opens up the possibility for a 100 percent retrace, all the way down to $49.022.
On the other hand, if the week’s close can manage to retake $144.58, then we could see litecoin deliver some gains in the weeks to follow.
The Awesome Oscillator remains red this week, for the fourth week in a row, and we await a change in color for a signal of bullish momentum.
Stellar saw a bearish move last week, but managed to close higher than the critical support at 0.00004563, the peak of the lagging line (purple), which was a former resistance level. WE look for XLM-BTC to trade in the range of 0.00004563 and 0.00005282 this week. These levels also represent breakout levels, with a move below/above these key levels acting as sell and buy signals respectively.
A weekly close higher than 0.00005282 should open up the all-time high at 0.00006370. A weekly close below 0.00004563 will see the market test the conversion line, which provides support near 0.00003600.
The Awesome Oscillator has turned red this week, suggesting it may be the right time to short XLM-BTC, and signals that a test of the conversion line and base line has a high likelihood.
NEO reached new highs against bitcoin last week as the NEO DevCon took place, but the market was not able to hang on, and fell toward the end of the week. The 50 percent and open support levels of the bullish Marubozu have not yet been tested and serve as ideal entries into long positions on NEO-BTC.
The Fibonacci retracement levels also provide some potential entries; the 50 percent level at 0.00842970 and the 38.2 percent level at 0.00687911 are the most probable places where support will be found.
The Awesome Oscillator remains green in color this week, pointing to bullish momentum remaining strong. A weekly close above 0.01189882 may point to a continuation of the upward trend, despite the wider market downturn. Support is also found at 0.01105141, and a failure to close below this level by the end of the week may indicate the strength of the bullish trend. On the other hand, a break below 0.01105141 will open up the supports mentioned above.
Ethereum Classic (ETC) is one altcoin that should perform well in the upcoming weeks/months. The weekly chart below shows that ETC-BTC tested the support provided by the conversion line (blue) around 0.002400, but managed to stay above this level. This week, the conversion line starts to display an upward gradient as it creeps up to 0.002500, suggesting an upward move could be imminent. However, the weekly close must be higher than 0.002500 for the market to remain above the conversion line and to ensure the bullish outlook remains valid.
The Awesome Oscillator suggests that bearish momentum is weakening, as the oscillator heads toward the zero threshold and is green in color for the fifth week in a row.
Therefore, we look to go long on ETC-BTC if the weekly close is higher than 0.002500, with a long-term target of 0.00418 to 0.00500, as the market should return to equilibrium and test the upper span of the Ichimoku cloud.
Monero crossed below the base line last week, giving a weak bearish signal. Two important supports lie at $172.638 and $151.26. Further support lies just below $86, as indicated by the trough of the lagging line (purple).
We also see that the Awesome Oscillator remains red in color. We look for the bullish saucer signal to appear next week to get ready to enter long positions. Until then, the outlook is bearish.
Viacoin was added to major exchange Binance on February 5, which prompted a large impulse buying pushing the coins in the green while all other cryptocurrencies were in the red. VIA-BTC reached a high of 0.0005520 but has since been tempered to around 0.0003700. After three attempts, the cryptocurrency has failed to break above the Ichimoku cloud and establish a bullish breakout. At the same time, the base line (red) has held up as support around 0.003400 for the past few weeks.
We maintain that VIA-BTC will break and close above the cloud between February 12 and 26, as the resistance zone is very thin. After closing above the cloud, we expect VIA-BTC to test the all-time high as explained by BTCManager during January.
Also, while hard to make out from the graph, the conversion line looks to be moving above the base line, which gives an indication of bullish momentum beginning to kick in.
Therefore, we look to buy VIA-BTC near the support provided by the base line (~0.003400) and also on the weekly close if it is higher than 0.003800. Notice that the lagging line has made the switch from below the previous price action to above. Once there is a weekly close above 0.003800, the lagging line will remerge above the previous price action and provide a bullish signal.