Cryptocurrencies Continue Range-bound Trading

FXOpen

Cryptocurrencies are continuing the range-bound trading. Bitcoin spent the last 7 days between a high of $240 and a low of $208. Similarly, Litecoin formed its own congestion area between $1.66 and $1.94. Peercoin had a wild ride, first rallying over 50 percent to a high of $0.475, then falling 31% to a low of $0.324. But ultimately, despite the large moves PPC is trading undecided at $0.382 per coin.

Bitcoin Range Continues, Volatility Shrinks

The range established last week continues with bitcoin prices stuck between a high of $240 and a low of $208. During the past six days BTC/USD traded in an even narrower range between $227 and $211. The decrease in volatility can be easily seen with the ATR (Average True Range) on the chart below.

BTCUSDDaily-fev10

The Average Daily Range of the last 14 days dropped from $28 dollars on January 26th to a low of $15 dollars yesterday. If history is any guide, the ever narrower ranges should eventually lead to a breakout. A move in either direction is a possibility so let’s examine both scenarios.

BTCUSDH4-fev10

On the upside, we may get some follow-through if prices clear $250 per coin. But the important number to watch continues to be the $300 round figure. A BTC move above here could lead to more gains toward $335 and perhaps to $350. On the lower end, while a break of the $200 round figure may lead to some losses, the key figure is the $192 swing low. A bitcoin breakdown below may lead us to retest the important $162 level.

Litecoin Stuck Between $1.66 and $1.90

Alternative cryptocurrency Litecoin is in a similar boat, having formed its own range between $1.66 on the low end and $1.94 on the high end. The crypto is trading weaker compared to its big brother. Today we saw prices dip briefly below the previous low of $1.665, marking a new low of $1.66. But the move lower was met with heavy buying that took LTC to $1.70 per coin. We are currently quoted at $1.691.

LTCUSDH4-fev10

Due to the possibility for false breaks near $1.66, a better level to look at is $1.50. A move below here may lead to more losses toward the January 18th low near $1.24. Further down, the $1 parity level will be very important. This was the stopping point for Litecoin’s decline this year. A breakdown below could exacerbate the losses. On the upside, a breakout beyond the $2 round figure may have some follow-through. But to restart the uptrend, LTC/USD will need to take out the previous swing high at $2.409.

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*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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