The crypto markets continue to respond to the events happening in the United States-Iran conflict. Any sign of escalating tensions is boosting the crypto markets higher. Google Trends shows that the searches for terms “Bitcoin” and “Bitcoin Iran” have surged in the past few days. This shows that investors are considering Bitcoin as a safe haven asset, similar to gold.
A report released by analytics firm SFOX showed that Bitcoin had a very low correlation with traditional assets such as gold and stocks in the second half of 2019. This made it an attractive hedge in a portfolio. The report also observed that Bitcoin’s volatility in 2019 was lower than the previous year but still, it remained high compared to other asset classes.
Daily cryptocurrency market performance. Source: Coin360
The recent rally in most major cryptocurrencies has picked up momentum after the U.S. and Iran conflict escalated. This shows that the move is news-based. If the tensions show signs of cooling down, the crypto markets might give back some of the recent gains. The extent of the pullback from the recent highs will give us an insight into whether the markets have bottomed out or not.
Nonetheless, for the short-term trader, the current volatility provides an opportunity to pocket some quick gains. The long-term traders can also participate but would have to ride the volatility until a sustained uptrend begins. Let’s analyze the charts and determine the critical levels to watch out for.
Bitcoin (BTC) broke above the overhead resistance at $7,856.76 on Jan. 7, which triggered our buy suggested in an earlier analysis. The breakout also completed a double bottom pattern, which has a minimum target objective of $9,278.52. Above this level, the rally can extend to $10,360.89.
BTC USD daily chart. Source: Tradingview
However, the bears are unlikely to throw in the towel without a fight. Usually, every breakout from a long consolidation returns to the breakout level. If the retest of the breakout level — which in this case is $7,856.76 — holds, it will confirm that a bottom is in place and a new uptrend is likely.
On the other hand, if the bulls fail to defend the support at $7,856.76, it will indicate weakness. Below $7,856.76, a drop to $7,000 is possible. For now, the traders can hold their long positions with stops at $6,800.
Ether (ETH) broke above the 50-day SMA on Jan. 6 but is facing selling close to the $151.829 to $157.50 resistance zone. This shows that the bears are aggressively defending this zone.
ETH USD daily chart. Source: Tradingview
If the ETH/USD pair bounces off the 20-day EMA, we anticipate the bulls to make another attempt to break out through the overhead resistance zone. If successful, a move to $173.841 is possible.
Conversely, if the bears sink the price below the 20-day EMA, a drop to $131.484 is possible. The traders can hold their long positions with stops at $122.
XRP surged above the 50-day SMA on Jan. 6. The 20-day EMA has started to turn up and the RSI has jumped into the positive territory, which suggests that the bulls have the upper hand.
XRP USD daily chart. Source: Tradingview
However, we anticipate the bulls to face stiff resistance at $0.2326. If the price turns down from this level, it is likely to find support at the 20-day EMA. A bounce off the 20-day EMA might offer a low-risk buying opportunity
Alternatively, if the bulls propel the price above $0.2326, a rally to $0.31503 is possible. The traders can wait for a bounce off the 20-day EMA or a breakout above $0.2326 before initiating long positions.
Bitcoin Cash (BCH) has not been able to sustain the price above $241.85, which shows a lack of buyers at higher levels. The altcoin can now dip to $227.01. If the price bounces off this support, we expect the bulls to make another attempt to sustain above $241.85.
BCH USD daily chart. Source: Tradingview
The moving averages have completed a bullish crossover and the RSI is in the positive zone, which indicates that the bulls are at an advantage.
However, if the bears sink the price below $227.01, the BCH/USD pair can dip to the 20-day EMA. If this support also cracks, a fall to $192.52 is possible. The traders can hold their remaining long positions with a stop at $215.
Litecoin (LTC) had risen close to $50 but could not scale above it. Profit booking by short-term traders has dragged the price towards the moving averages. If the altcoin bounces off the 20-day EMA, we expect the bulls to make another attempt to push the price above $50.
LTC USD daily chart. Source: Tradingview
If successful, a rally to $60 and above it to $66 is possible. Therefore, the traders can hold their long position with stops placed at $38.
Contrary to our assumption, if the bears sink the price below the 20-day EMA, the LTC/USD pair will turn negative.
EOS broke above the overhead resistance at $2.8695 and came close to the downtrend line today. However, it could not break above the downtrend line and reversed direction from just below it.
We anticipated the bears to mount stiff resistance at the downtrend line. Hence, we had suggested traders take partial profits on the long positions in our previous analysis.
EOS USD daily chart. Source: Tradingview
If the EOS/USD pair finds support at the 20-day EMA, we expect the bulls to attempt a break out of the downtrend line once again. If successful, a rally to $3.50 and above it to $4.24 will be on the cards.
On the other hand, if the bulls fail to keep the price above $2.5804, a drop to $2.4001 is likely. The traders can trail the stop loss on the remaining long position at breakeven.
Binance Coin (BNB) had broken out of the 50-day SMA on Jan. 6 but it could not pick up momentum. This shows a lack of demand at higher levels. The price might now dip to the immediate support at the 20-day EMA.
BNB USD daily chart. Source: Tradingview
If the support holds, we anticipate the bulls to make another attempt to carry the BNB/USD pair to $16.50. The 20-day EMA has flattened out and the RSI is close to the center, which points to a balance between buyers and sellers.
A break below the 20-day EMA will tilt the advantage in favor of the bears. Hence, the traders can hold their long positions with a stop at $12.95.
The bulls are attempting to keep Bitcoin SV (BSV) above $113.96, which is a positive sign. If successful, a rally to $140 and above it to $155 is possible. The 20-day EMA is sloping up and the RSI is in the positive territory, which suggests that bulls have the upper hand.
BSV USD daily chart. Source: Tradingview
If the price breaks out and closes (UTC time) above $120, the traders can trail the stops on the long position to $108. On the other hand, if the price slips below $110, we anticipate the bulls to defend the 20-day EMA.
Our bullish view will be invalidated if the bears sink the BNB/USD pair below the 20-day EMA.
The sharp rally in Monero (XMR) had carried it above the overhead resistance at $57.1199. However, the bulls could sustain the level, which shows that the bears are selling aggressively at higher levels.
XMR USD daily chart. Source: Tradingview
The price can now drop to the 20-day EMA. If the level holds, we expect the bulls to make another attempt to scale and sustain above $57.1199. We will watch the price action close to the 20-day EMA before suggesting a trade in it.
Our bullish view will be invalidated if the bears sink the XMR/USD pair below the 20-day EMA. Such a move can drag the price back to $44.50.
Cardano (ADA) has again made it to the top ten cryptocurrencies by market capitalization. The altcoin broke above the overhead resistance at $0.035778 on Jan. 06 but could not scale above the overhead resistance at $0.039.
ADA USD daily chart. Source: Tradingview
This shows that the bears are aggressively defending the higher levels. The ADA/USD pair is likely to find some support close to $0.035778 and below it at the 20-day EMA.
If the pair bounces off $0.035778 or the 20-day EMA, it might give a low-risk buying opportunity with a target objective of $0.042 and $0.046. However, if the pair breaks and sustains below the 20-day EMA, it might again dip to $0.0329526.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
Joseph Spezzano received a Masters Degree in computer science from The University of Massachusetts. Joseph has been working as a full-time blockchain programmer for the past 5 years. In his spare time, Joseph enjoys writing for CryptocurrencyInvestments.com and traveling.