Most traditional investors have stayed away from Bitcoin citing its volatility. Yet, this has not stopped Direxion Asset Management LLC from planning to list “leveraged” and “inverse” funds that will rise or fall twice as fast as the Bitcoin price.
Nevertheless, the big question is whether the US securities regulators will give the nod to such an instrument. Any ETF acceptance is likely to give a big boost to cryptocurrencies.
With the market capitalization of the crypto universe inching towards the $1 tln mark, let’s see what kind of trading moves might seem suitable.
BTC/USD
We had suggested initiating long positions in Bitcoin at $15,500 in our previous analysis. The level was reached yesterday, Jan. 5, which triggered the long position. Subsequently, the price broke out of the resistance at $16,500 and rallied to a high of $17,083.67, where it witnessed profit booking.
Currently, the cryptocurrency is in a pullback. It is likely to find support at the $15,500 mark that had served as resistance earlier. The trendline support is also at the same level.
The BTC/USD pair is still not out of the woods. If it returns from the current levels and breaks the neckline at $13,000, it will complete a complex head and shoulders pattern, which will be a bearish sign.
Therefore, we recommend keeping a stop loss of $15,000 in our positions. It’ll reduce our risk.
On the upside, we expect a rally to $19,000 levels if Bitcoin sustains above $17,000. But traders should trail their stops higher as the trade moves in their favor.
ETH/USD
For the past two days, Jan.4-5, Ethereum has been facing profit booking at the resistance line of the ascending channel.
ETH/USD
It has not given up any ground, which shows buying strength at lower levels. We anticipate another attempt by the bulls to break out of the channel.
If successful, the ETH/USD pair can climb to $1,200 levels and thereafter to $1,310.
In case the bulls fail to break out of the ascending channel, a fall to the lower end of the channel at $840 is likely. That’s why we believe partial profits should be taken between $1,000 and $1,040 levels. Rest of the positions can be held with a close stop loss depending on the strategy of the trader.
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