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BTC China has decided to shut down operations by Sept. 30. The first reaction by harried traders on such announcements is to sell and encash their holdings. Therefore, the sharp fall is understandable.
Does this mean that traders around the world should also panic? No, because after the initial selling subsides, aggressive bulls will start buying at important support levels. Should we also join the early buyers or should we wait for more confirmation before initiating long positions?
Bitcoin has completed a 61.8 percent Fibonacci retracement of the rally from $1,752 to $4,975. Aggressive buyers have taken advantage of the sharp fall and have initiated long positions close to $2,970 levels, which is a crucial support.
Nevertheless, it is unlikely that Bitcoin will quickly rally $5,000 levels because the bears will again short at higher levels. We expect selling pressure at the $3,800 levels, closer to the downtrend line.
Therefore, we recommend waiting for another successful retest of $2,970 before initiating long positions.
However, aggressive traders can buy 25 percent of their allocation on dips to about $3,200 levels. The stop loss should be placed at $2,900 and the profit objective is $3,800.
The digital currency is likely to remain volatile for the next few days. Therefore, traders should play for small profits.ETH/USD
Ethereum broke below the 61.8 percent Fibonacci retracement of the rally from $129.78 to $409.42. However, strong buying support emerged closer to the $200 levels, pushing prices higher.
Nevertheless, the digital currency is trading inside a descending channel. We expect bears to sell closer ...