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Black Friday seems to have arrived earlier in the cryptocurrency market. But, unlike the real Black Friday, nobody seems to be rushing in to buy cryptos at the current discount rate.
According to the Crypto Fear and Greed Index (CFGI), the overall market sentiment turned into “extreme fear” as investors expect a further downturn. However, historical data reveals that every time the CFGI goes into “extreme fear,” a buying opportunity is presented.
The following technical analysis will evaluate whether Ethereum, XRP, and Litecoin are bound for a deeper retracement or a bullish impulse.
In the last few weeks, Ethereum fell over 30 percent. This cryptocurrency went from trading at a high of $199 on Oct. 26 to a low of $138 yesterday. Despite this significant bearish impulse, ETH is now signaling a pullback to $181.
As a matter of fact, the TD sequential indicator presented two buy signals. These bullish signs came in the form of a red nine on both the 1-day and 12-hour chart. This technical index estimates that Ethereum could rise for one to four candlestick or begin a new bullish countdown.
Along the same lines, a reversal doji formed of ETH’s 12-hour chart. This candlestick pattern perceives a change in momentum from bearish to bullish. Closing above the 75% Fibonacci retracement level could validate the optimistic outlook. If that happens, Ether could surge to the next level of support around the 65% Fibonacci retracement level that sits at $181.
Nevertheless, a spike in sell orders that get Ethereum to close below the recent low of $138 could be catastrophic for its price. ETH could then try to test the $115 support level.
XRP’s price was contained within the $0.24 support level and the $0.30 resistance level since mid-August. However, the recent price action took it to break below support to hit a low of $0.22. If the selling pressure behind this cryptocurrency continues, it would likely drop to the next level of support around $0.20-$0.17.
Adding to the bearishness, a death cross between the 30-day moving average and the 50-day moving average developed on XRP’s 1-day chart. This is a bearish formation that signals that a new downtrend is underway.
Closing above the 7-day MA could invalidate the bearish perspective. And, if the volume is strong enough, XRP may move back up to test the $0.30 resistance level once again.
Since July, Litecoin’s price action seems to be characterized by a series of bear flags forming on its 1-week chart. These are considered a continuation pattern. They tend to develop after significant corrections, which are known as the flagpole. And, they are followed by consolidation, known as the flag. Finally, bear flags lead to breakouts in the same direction as the initial price movement.
LTC currently appears to have reached the target given a bear flag with the recent drop it experienced. The target was determined by measuring the height of the flagpole, which is approximately 27.50 percent. This is nearly the same percentage that Litecoin loss over the last week.
On the upside, LTC would have to break through the $49.50 resistance level. But, the significant resistance cluster is found between $55 and $60. Conversely, this cryptocurrency would likely further retrace if it closes below $44. From that point, the next levels of support sit around $40 and $36.
Despite the market downturn, the cryptos previously analyzed could be presenting bullish opportunities that are only given after such steep declines. This could be why the CSO at Blockstream, Samson Mow, said that those who were “rattled” by the recent bearish price action, are not “worthy of enjoying” it.
Although it is clear where the market would be heading next, waiting for confirmation before taking a position in the market is always the option that poses lower levels of risk.
Disclaimer: The technical analysis above should not be considered trading advice from CCN. The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in different cryptos but does not engage in short-term or day-trading.