- Bitcoin price movement continues to fall towards the $40,000 area, but there is a lack of conviction.
- Ethereum price generates a bear trap below the bull flag pattern.
- XRP price action finds buyers and rejects further selling pressure.
Bitcoin price has developed one of the most visible head and shoulders patterns on the daily chart, creating many new short positions before the confirmation of the pattern is completed. Likewise, the price of Ethereum saw several new short positions created after dropping below the bull flag. XRP price action is playing catch-up with Bitcoin and Ethereum as buyers start pouring in.
Bitcoin price set up for massive short squeeze
Bitcoin price action has definitely been in a downtrend lately. Since opening last week, bitcoin has fallen more than 20%. Fear is the emotion that affects most retail traders.
However, Bitcoin’s decline has been almost a textbook in positioning and timing. A bit of subsequent selling occurred as the price of Bitcoin dropped below its low on December 10th. Developed short pressure setting on reversal point and figure chart of $1000/3 squares.
The default buy entry is a buy stop order on a triple-box reversal, currently at $45,000 with a stop loss at $41,000 and a profit target at $60,000. The trade idea is a 3.75:1 risk/return setup with an implied profit target close to 35% of the entry. A trailing two-box trailing stop will help protect any profit made after entering.
BTC / USD $1,000 / 3-box Reversal Point & Figure Chart
There is no invalidation point for the default purchase entry. If the bitcoin price moves lower, the entry and the stop loss follow in tandem, but the profit target at $60K remains the same.
Ethereum price is driving short sellers to slaughter
The price of Ethereum, like Bitcoin, created conditions where many short sellers entered the market convinced of a new bear market. The trap was too sweet for many bears to resist, but those who took the bait will likely feel some tremendous pressure over the next week.
There is a theoretical buy entry for Ethereum on the 100/3-box reversal point chart. The long setting is a buy stop order at $3,500, a stop loss at $3,100, and a profit target at $5,500. The theoretical long trade is a 5:1 risk/reward setup with an expected profit target of over 60% from the entry. A three-box Trailing Stop will help protect any profit made after the entry point is reached.
1003 ETH / USD / Square Reversal Point and Chart
As with Bitcoin, there is no invalidation point for Ethereum price within the long theoretical setup. If Ethereum moves lower, buy stop and stop loss move with lower price movement, but profit target remains the same.
XRP price is expected to return to the $1.00 value area
The price of XRP found that buyers are holding above $0.75. Understandably, many bulls remain on the sidelines. Given the current position of XRP within the Ichimoku Kinko Hyo system, it is no wonder why buyers are so lukewarm about the buildup.
XRP price action has technically fulfilled all the requirements for the perfect bearish Ichimoku breakout that was set up two days ago. Sellers made several attempts to initiate the capitulation movement, but passive buyers halted the action.
XRP / USDT Ichimoku Daily Chart
It is likely that many of the sidelines bulls will want to wait for the $0.82 level before opening new long positions for XRP. $0.82 will put XRP price above Tenkan-Sen, Senkou Span A and 38.2% Fib. Bulls may find an entry with the support structure below as less risky than the wide open space below $0.75.
More conservative buyers will likely wait for a break above the top of the cloud (Senkou Span B) to confirm a move to $1.00.