Stellar Price Analysis: Traders Wait For a Positive Movement

Stellar is trading under the moving averages. XLM/USD hasn't been able to break above the 20-day EMA. You can see the chart and notice how 20-day EMA ( black line) forms a strong barrier for XLM to advance. Additionally, the pair has broken down $0.072 support level. Both $0.072 and 20-day EMA are nearly at the same level.

  The bulls needs to get the price above these two resistance to resume the uptrend. If they succeed, Stellar will move up to 50-day EMA, then to $0.093 level.

 If the price sustains below the critical support for a long time, it will be negative for Stellar. It's not recommended buying under resistance, therefore, traders should wait until a new buy setup appears.

ONT (Ontology) : RSI Shows Bullish Divergence

ONT plummeted under the uptrend line on Aug.15, it acted as strong support before, so it may behave as resistance now. The pair tried unsuccessfully to scale above the uptrend line in the last three days. Additionally, ONT/USD is trading under the moving averages.

However, the only positive thing now is that the bullish divergence on RSI which indicates a potential reversal in price soon. It must be noted that RSI divergence is misleading in some cases. Therefore, we need other bullish confirmation signals before we go long on ONT. The price must break up the trend line then scale above the 20-day EMA.

If the trend line shows strong resistance, we may see another dip to $0.69 then to $0.50.

NEO Signs Of Weakness

NEO has suffered lately from the general weakness of Cryptocurrencies. 

After repeated retests of the uptrend line, bears succeeded to drag the price below it. It is a bearish sign. Additionally, NEO is trading below the moving averages and RSI is in the negative zone. All of these show that sellers have the upper hand.

The next support to watch now is $9.18. On the other hand, if the price breaks down of $9.18, it may drop to $6.80.

Bulls need to push the pair above the uptrend line to start a recovery. You shouldn't buy a fresh position as long as the pair sustains below the uptrend line. As we recommended in the last analysis, traders should buy when price breaks up the 20-day EMA. 

Litecoin Looks More Bearish Than Before

Litecoin plummeted below the support of $76 and is trading under the moving averages. Most importantly, it completed a well-known reversal Head and Shoulders pattern when the price plunged below the neckline. These developments tell us that the worse is still to come.

In this pattern, it's common that price retests the neckline before continuing its course down again. To neglect this pattern, the price must go above the neckline again. 

If LTC struggles to break above the neckline, bears will seize the opportunity to push the price lower.  

The next support levels are $70 then $60.

To resume the uptrend, the pair should breakout both the neckline and 20-day EMA. 

Ethereum Price Analysis: Ethereum Struggles to Recover

 

 

As the sentiment in the whole Cryptocurrency is weak at least in a short term, Ethereum couldn't scale above the moving averages. Both the 50-day EMA and 20-day EMA make it hard for ETH/USD to advance. Moreover, Ethereum lost the battle with moving averages and breaks down the uptrend line 1 and $190 level. It's a 61.8% Fibonacci level of the rally from $80 to $363.

The price has tested and rebounded from the main uptrend line, it's the main and only major support for Ethereum, but if that support also breaks down, the fall can extend to $150 level.

RSI confirms the weakness of the bulls. The trend line 1 and the 20-day EMA are at the same level,therefore, traders should expect  strong resistance from them.

Traders should be on the sideline at the moment until a clear buy setup appears.

Bitcoin Price Analysis : Bears Take Profits

 

 

 

Bitcoin Price Outlook

 After the failure of the bulls to penetrate the downtrend line, BTC/USD has fallen hard in the last couple of days. The downtrend line is the best place for the bears to take profits. The pair dipped below the 50-day EMA moving average and the ascending channel which shows the weakness of the bulls in the short term.

 

 

However, BTC  has bounced back today from the 100-day EMA, below it the $9080 level will act as a strong support. Traders should defend this support strongly. If it breaks down of $9080 level, Bitcoin may fall to $7455 level and it will turn negative.

 

Any recovery attempt from the bulls will face resistance from the moving averages and the lower line of the ascending channel.Also, the zone between $10,000 and 10,450 will be a critical place for the bulls if they want to resume the uptrend movement.

 

Exit Strategies to Protect your Capital

Exit Strategy is a very important approach for any trader who wants to keep his capital from disappearing. Any successful trader can lose, but what differentiate successful traders than others is how much loss can they accept. They cut their loss short. Traders must avoid catastrophic losses by all means, and they can achieve this by using Exit Strategy.

Exit Strategy is also important for traders who are in profits and don't want to turn their profits into loss by choosing the right time to get out of the trade.

There are several Exit Strategies out there, but we will focus on three kinds in our article.

1. Moving Averages 

In this strategy, we use 20-day EMA with 50-day EMA. You can also use it with different EMAs length or time frames to see which best for you.

 The strategy is so simple, we exit our trade when 20-day EMA crosses under 50-day EMA. As a confirmation, you can wait for the price to retest the 50-day EMA and bounce back off it.

In the ETH/USD chart below, 20-day EMA crosses under 50-day EMA, this is the first signal of a trend reversal, so we waited for the price to touch back the 50-day EMA as a confirmation and exit our trade. Traders may also take this signal to open short positions.

  After we closed the trade, Ethereum has declined sharply.

Let's take another example, below is the GOLD daily chart. As you can see 20-day EMA crosses under 50-day EMA. Also, the price touched back the 50-day EMA. Therefore, we exited our trade.

After we exited the trade, Gold fell more than 10%.

Moving Averages Crossover Trading Strategy

2. Head and Shoulders

Head and shoulders is a well-known reversal pattern. When spotted in charts traders expect a reversal in price is more likely to happen. You can see them on all charts length. It consists of a head ,two shoulders and a neckline as shown in the chart below. To validate the pattern, price must break down the neckline.

The exit point should be placed below the neckline. In some cases, the price may retest the neckline before it resumes its way down. Thus, retests of the neckline may be taken as a confirmation to exit any open positions. 

In HT/USD daily chart below, the Head and Shoulders pattern is  spotted in the chart, so we placed our exit point just below the neckline.

After we closed our open position, HT/USD plummeted from $4 to $1.50.

3. Trend Line 

  When a major trend line is broken, it is a signal of a trend reversal. We should exit once the trend line is broken. Usually, the price retests the trend line before continuing the fall.

Below is USOIL daily chart, the price broke down the uptrend line, thus, we placed our exit point below the trend line.

 

  Now, let's use two exit strategies in one chart. I will use the same above chart for my example. I employ the trend line and moving averages strategies on the USOIL chart. Notice how amazingly the two strategies gave us the same exit point. We exited the trade with confidence.

After our exit, OIL dropped more than 20%. 

Dead Cat Bounce Trading Strategy 

NEO Struggles to Clear Resistance

NEO finds it difficult to clear the 20-day EMA. Also, it bounced back from the 23.6 Fibonacci level at $12.35 for several times. RSI is in the middle, testing the resistance line.

The only support left is the uptrend line, which price tested numerous times before. It is a very important support for the bulls. If it is broken, it will trigger many stop losses by the bulls to cover their positions, which could drag NEO to $8.50 level.

Traders should keep NEO above the uptrend line and then push the price above the 20-day EMA to resume the uptrend.

 Traders should watch out  the uptrend line more carefully in the coming days. They can open fresh positions on a breakout of the 20-day EMA.

Bitcoin Climbs Near $12000, Will the Surge Continue?

Daily Chart

 
Bitcoin has built solid support around $9100, from where it started to skyrocket. After successfully scaled above the moving averages, BTC/USD rallied to the downtrend line, where it may face some resistance. 

If Bulls can clear this hurdle, Bitcoin can move up to $12,800, thereafter to the recent high of $13,900.

However, moving averages will act now as support levels for any correction. Since Bitcoin is trading now at the downtrend line we don't recommend open any fresh positions now. Traders should wait for a breakout of the downtrend or a correction to the supports to initiate long positions.

4H Chart

 On the 4H chart,  the 20 EMA has completed a crossover with 50 SMA which is a bullish sign. Also, 20 EMA provides great support for Bitcoin.

XRP Price Prediction: Ripple remains near main support

XRP is attempting to clear the 20-day EMA. It is the main major resistance right now. If traders succeed to take XRP above the 20-day EMA, it may go up to 50-day SMA, where traders may face stiff resistance. Ripple will take a boost when both moving averages are scaled. Above the moving averages, traders should target $0.45 and $0.50 levels respectively. 

However, XRP is trading near the long term support at $0.28. It's the psychological main support, thus, bulls should defend it viciously. A breakdown of this main support will be a negative sign.

RSI is in the middle which shows Ripple is in a consolidation period.
Traders should initiate long positions on a breakout of the moving averages or at the main support at $0.28 with a stop loss just below the main support line.

ONT (Ontology) Price Prediction: Moving averages make it hard to advance

 

NEO Chart

ONT faces strong resistance from the 20-day EMA. Also, ONT is trading below all the moving averages which shows the bears have the power at least in the short term. ONT has corrected close to 78.6% of the entire rally from the low of $0.40 to $2.17 and this is also a negative sign. 

 Although ONT has rebounded from the uptrend line,  the 20-day EMA needs to be scaled to resume the uptrend. If ONT remains under the 20-day EMA, a retest of the uptrend line is more likely to happen again. It is very important support, if it is successfully broken down, a retest of the recent lows of $0.40 will be in the cards.  

 There are not any reliable buy setups, thus, traders shouldn't open any fresh positions at the current situation.

Ethereum Price Prediction: Eyes on $190 level

In our last analysis ,we expected a retest of the uptrend line and that's what happened. However, the rebounded from the trend line wasn't strong enough to scale above the major resistances. This shows that the bears seize any opportunity to sell on higher levels. 

Ethereum has corrected close to 61.8% of the entire rally from the low of $80 to $363. This level acted as strong support before, it's around $190. If Ethereum plummets and closes below $190, it can fall to $140 level.

On the upside, Ethereum needs to scale above the 20-day EMA  to resume the uptrend. As long as Ethereum is trading below the moving averages, traders should patiently wait before opening any fresh positions.

Moving Averages Trading Strategy

Moving Averages Crossover

We can use Moving Averages in numerous trading strategies but in this article, we will focus on A crossover strategy.

This strategy works when the market is trending, but if the market is choppy or moving in sideways,this strategy may provide false signals.

In this strategy, we use 5-day EMA with the 20-day EMA crossover. You can test different EMAs length or time frames to see which works best for you.

 To eliminate false breakouts, we should use another tool as a support of our view. In our strategy, we will use the Volume as a confirmation tool.

We open long positions when 5-day EMA crosses above the 20-day EMA accompanied by high volume. We open shorts when 5-day EMA crosses below the 20-day EMA accompanied by high volume.



Let's take an example, below is a daily chart of Gold, as you can see the 5-day EMA crosses above the 20-day EMA. Notice how the volume increasing after the breakout, thus, we take it as a confirmation to open a long position.

After this breakout Gold made a significant profit.

Let's take another example which gave us two signals. This is ETHUSD daily chart. Firstly, the 5-day EMA crosses above the 20-day EMA accompanied by huge volume which validates our buying position. After the breakout, Ethereum rose more than 50%.
 

The second signal came when 5-day EMA crosses below the 20-day EMA, also the volume increases compared to the previous days, thus, we opened a short position with confidence. Ethereum declined from $280 to around $200 after the breakout.

Now, let's take an example of false signals. Below is a daily chart of EOSUSD. As shown from the chart in the late of April, 5-day EMA crosses below the 20-day EMA, however, the volume was weak which doesn't support a bearish view. Look carefully how the volume goes up each time 5-day EMA is above the 20-day EMA, which indicates the bullish view is still strong.

Even if we can make some profit using this strategy during a sideways market, but we don't recommend trading it to avoid false breakouts.

 

Ethereum Price Analysis: Bears pushes ETH down

In the daily chart of Ethereum, the uptrend line provided support on JULY 16. This is long term support for Ethereum.

 However, numerous elements that concern us. All the moving averages show a bearish view and there is a death cross between the 50-day SMA and the 20-day EMA . Also, RSI is in a downtrend condition.

With all these conditions a retest of the uptrend line is more likely to happen again.

 Traders should keep a positive view as long as Ethereum stays above the uptrend line.

In the 1H chart below, Ethereum is trading in a downtrend channel which confirms the bearish outlook in short-term. Day traders may use the lower line  of the channel as a buying opportunity and the upper line as taking profit.

Bulls defend NEO

After a sharp decline NEO has rebounded from the uptrend line, which shows that the bulls are ready to defend this important support. The pullback from the uptrend line witnessed a strong resistance from both the 100-day and 200-day EMA. They are nearly at the same level.

If the bulls scale above the moving averages, NEO may rise towards next resistance zone between $14.50 and $15 level.

However, if NEO/USD turns down from this strong resistance, it will find support from the uptrend line. 

If the price plummets below the uptrend line, it will show a change in  trend. As long as the price sustains above the trend line, NEO will keep the bullish view alive.

Since NEO is trading at a resistance level , traders should wait to buy at supports.

NEO fights recovery

Like other Cryptos NEO/USD has declined more than 50%  since June 26. It fell below the moving averages. The pair is trading now at $11 just above the 200-day SMA. The first resistance can be seen at $11.35, it's the 61.8 Fibonacci retracement level.

An upside break up can trigger rise towards next resistance at $13.19.

On the other hand, if NEO/USD slips below the 200-day SMA, it may plummet to $8.75 support level. RSI is close to oversold territory which shows that the power of the bears.

Bitcoin: Struggles to clear resistance

Bitcoin broke below the upper line of the ascending channel on July 14. But as expected from the last analysis it found support from the 50-day SMA. The pair bounced off the 50-day SMA and rose to test $11,000 level. 

However, Bitcoin faced stiff resistance from both the 20-day EMA and the trend line. If it fails to clear them up, it may correct down to the 50-day SMA and then the lower line of the ascending channel. 

The RSI is under 50 and in a downtrend condition which shows the bulls is losing power. There isn't any clear buying setup at the current conditions, hence, traders should wait to buy at supports or if Bitcoin goes above the 20-day EMA.

  

 

WTI Price Forecast: Bulls have the upper hand

The main trend is still bullish in the daily chart. WTI crude oil is trading above the major moving averages. Also, RSI at 60 which indicates the bull have the upper hand and Parabolic SAR confirms the bullishness.

On the other hand, USOIL could not clear the $60.85 level in the last two sessions last week. It's a Fibonacci retracement level . If USOIL manages to penetrate it a move to the next resistance at $63.77 is expected.

In the way down WTI will find supports from the trend line and then from $57.35 level. Since the trend is up these two supports areas may attract the bulls to come. WTI will turn negative if it sinks  and close below $56.06 level.

Bitcoin Price Predication : BTC is trading above the ascending channel

On the daily chart of Bitcoin, the upper line of the ascending channel has provided great support for  Bitcoin dips since 27th June. Bitcoin has bounced from it numerous time. It actually acts as the first defence wall for BTC, hence, it gives us great trading opportunities. As long as the price sustains above the ascending channel, the bulls will try to test the recent highs at 13,900 However, if Bitcoin breaks it down it will find support from the 50-day SMA and then the lower line of the ascending channel.

Traders should be patient and wait to buy on supports mentioned above. Levels to watch for short term is 11,800( it's the 23.6 Fibonacci level) then 12,500. RSI is at 55 which shows a consolidation for the next few days.

 BTC/USD will only turn negative if it slips below the ascending channel.

How to use RSI effectively in Trading

Relative Strength Index (RSI) is a well-known technical indicators among traders. However, some of traders use it in a traditional way or use it wrongly. In this topic we will cover some profitable ways to use RSI.

 What is RSI?

 Relative Strength Index (RSI) was developed by J. Welles Wilder in 1978. It is a momentum indicator that measures the speed and change of price movements. Many traders use it to spot the overbought and oversold state of the market to initiate long or short position.

The readings of the indicator fluctuate between 0 and 100. The RSI is considered overbought when above 70 and oversold when below 30.

How to use RSI profitably?

1) Chart Pattern

There are a number of chart patterns  like Head and Shoulders, Double Tops , Pennants and many more. We see them forming in price charts. Amazingly, they are also formed in RSI even if they don't show up in price charts.

Let's take an example: 

This is WTI Crude Oil daily chart. If we look at the RSI, we will clearly see a Double Bottom pattern which doesn't appear in the price chart.

We would have traded this on a breakout on the RSI and made 10% profit.

2) Divergence

There are two kinds of divergence

a. Bearish divergence : occurs when price forms higher highs  while the RSI forms lower highs.

b. Bullish divergence : occurs when price forms lower lows while the RSI forms higher lows.

The divergence between price and RSI warns us of the market reversal.

Let's take an example:

In the chart below, the RSI formed a lower high while the price formed a higher high on the OIL daily chart. It's a bearish divergence,thus, a short position should be taken with stop loss placed above the  higher high on the price chart.

After this trade, Oil dropped more than 20%.

Let's take another example:

  In the chart below, the RSI formed a higher low while the price formed a lower low on the ETHUSD daily chart. It's a bullish divergence,thus, a long position should be taken with stop loss placed below the  lower low on the price chart.

 After this trade, ETHUSD rose a 100%.

Also,in the chart below, the RSI formed a higher low while the price formed a lower low on the AUD/USD daily chart. It's a bullish divergence,hence, a long position should be taken with stop loss placed below the  lower low on the price chart.

 After this trade, AUD/USD rose 150 pips.

 3) Trend Lines

They provide us with support and resistance points where we can buy or sell. Most importantly, many traders look for Breakout and Breakdown of the trend lines as they give us huge potential profits. You should go long on Breakout and short on breakdown. In this article we will look for trend lines that show up on the RSI not on the price chart.

Let's take several examples to demonstrate this:


Firstly, this is WTI Crude Oil daily chart. If you look at the RSI, you will notice that there is a breakout of a bearish trend line.This is a bullish sign. After the breakout on the RSI, oil went up 10%.

Below is a daily chart of Gold. As you can see the resistance line on the RSI was broken and this is a sign to go long on this trade. Gold rose sharply after the breakout.

And finally we get back again to Oil chart. If you look at the RSI , you can see the support line was broken down. This is a bearish sign. If you had taken this trade, you would have ended  up with 20% profit.

Although there is also a breakdown on price chart  but the signal came earlier from the RSI.

Dead Cat Bounce Trading Strategy

What is A Dead Cat Bounce

It is a bounce or correction of the price during a strong bearish trend either because of some news or because of profit taking. Unprofessional traders can't distinguish it from a real reversal trend which may cause them huge losses when the price resume it's bearish way.

There are numerous trend indicators that can help any trader to spot a real reversal in trend than a fake one ( dead cat bounce) such as, Moving averages, MACD and Parabolic SAR.

How to trade Dead Cat Bounce?

This is WTI Crude Oil daily chart. As we can see the price started to went up. However, neither the moving averages nor the Parabolic SAR  did signal a reversal. Now , we need a confirmation of a Dead Cat Bounce which happened when the price plummeted below the last low at $ 58.13 and we could open short position at this level.

Let's take another example. This is USD/JPY daily chart. After a hard decline the pair stared to correct up. In spite of that, the moving averages and RSI didn't support a reversal in price, thus, we waited the price to break down the last low at 109.30 to go short.

As usual, you have to trade wise and not take any analysis as a guarantee, so you should use stop loss on any trade you open. On the example above you could place the stop loss above the last high.