PayPal’s cryptocurrency announcement announced the trigger that pushed the price of Bitcoin (BTC) to a new 52-week high. During news events like these, traders are caught holding short positions and forced to close their trades, lowering the short positions seen during the October 21 rally.
Weekly performance of the cryptocurrency market. Source: Coin360.com
However, after this first outbreak, the next stage of the trend is only possible if demand rises and the bulls continue to buy at higher levels.
Data from Huobi indicates that professional traders are not sure if the current rally requires longs, and Cointelegraph member Marcel Biman explained that this could be a bearish signal.
On the other hand, the open interest in CME Bitcoin futures paints a different picture. CME is now the second largest Bitcoin futures exchange by open interest, second only to OKEx. This indicates that institutional demand may rise.
This dataset, unlike the Bitcoin futures exchanges, only adds confusion to traders regarding the potential next move.
Let’s dive into the psychology of traders for a better understanding. Institutional investors rarely buy due to FOMOs because they tend to be more reluctant
These big traders can wait for the gains to support and complete a successful breakout level renegotiation before making a purchase.
Let’s take a look at the top 10 digital currencies to determine what technical indicators design.
Bitcoin / USD
Bitcoin (BTC) broke out and closed above the $ 12,460 resistance level on October 21. The move helped the cryptocurrency to reach a new 52-week high, which is a sign of strength.
Daily chart BTC / USD. Source: TradingView
The 20-day exponential moving average ($ 11,679) is sloping, and the 50-day simple moving average ($ 10,943) is starting to rise. This indicates that the short-term and long-term trend is favored by the bulls.
However, a rally above $ 13,000 pushed the RSI to 81, a level that was profitable when it was struck the last two times.
The BTC / USD is facing a sell-off of over $ 13,000, but it appears that the bulls are in no hurry to close their positions. If the pair does not fall below $ 12,460 over the next few days, it increases the probability of a rally to $ 14,000.
On the contrary, if the bears are able to push the price below the $ 12,460-12,050 support zone, this indicates a lack of demand at higher levels. This move indicates that the current outbreak was a bear trap.
ETH / USD
Ether broke (ETH) and closed above $ 395 on Oct.22. This move completed the ascending triangle pattern targeting $ 478.
ETH / USD daily chart. Source: TradingView
The high of the 20 day moving average ($ 377) and the RSI indicator in positive territory indicate that the bulls have prevailed.
However, the bears are currently trying to bring the price back below the $ 395 breakout level. If they succeed, it will indicate that the current flash was fake. Next support on the downside is the uptrend line.
On the contrary, if the ETH / USD pair bounces back at $ 395, the breakout is valid. The uptrend may resume after the bulls push the price above $ 421.
XRP / US Dollar
On October 21, XRP tried to rise above the $ 0.2295-0.26 range, but the bulls failed to close above $ 0.26. This indicates a lack of buyers at higher levels.
Daily chart XRP / USD. Source: TradingView
The inability of the XRP / USD pair to break out of range may have attracted booking gains. If the price falls below the moving average, this means that the limited movement in the area is likely to continue for several more days.
Contrary to this assumption, the bulls will once again attempt to push the pair across the $ 0.26-0.265763 resistance zone if the price breaks through the 20 day moving average ($ 0.24).
The breakout and close (UTC) above the resistance zone will complete the inverted head and shoulders pattern that may signal the start of a new uptrend with a target of $ 0.30.
BCH / USD
Bitcoin Cash (BCH) is currently facing selling near the $ 280 high resistance. This indicates that the bears are trying to keep the price below this level. If successful, the EMA can be dropped for 20 days ($ 247).