$20K in Play Again. Is a Breakout Looming?
Bitcoin and Ethereum Geared Up for Fresh Rallies. XRP Shoots Up 15%
Ripple Labs scored a major victory against the SEC in their legal clash and XRP was quick to react, bursting more than 15% to the upside, to a high of 0.5094. Some of the gains were erased as XRP/USD retraced and is currently trading at 0.4866 but XRP is still up 9.84% at the time of writing.
U.S. District Court judge Analisa Torres ruled to release a set of documents associated with a speech delivered by William Hinman (former Director of the SEC’s Division of Corporation Finance). In the said speech, Hinman expressed his opinion that ETH is not a security and this was considered important evidence by Ripple Labs. Time will tell if this victory will push XRP’s price significantly higher or if it was a short-lived burst.
Bitcoin is slowly grinding below the resistance at $20K but the little momentum that exists is bullish. Small candles with long wicks are crawling upwards as the apex cryptocurrency has added only 0.40% in the last 7 days and 0.38% in the last 24 hours. This shows that Bitcoin is range-bound but periods of consolidation are followed by strong breakouts, thus a move above $20K is possible as a bottom may be in place.
Ethereum is showing similar behavior, with small candles and long wicks that suggest indecision. ETH/USD has been moving almost in a straight line for the last few days, closing the sessions almost at the same price as they opened. Currently, ETH is changing hands at $1,330 and is sitting just below the resistance at $1,360.
Technical Outlook – BTC/USD
The pair’s lack of momentum is likely to translate into choppy movement and multiple fake-outs. This means that a potential break of $20,000 should be treated with caution because it could turn into a bull trap.
A bull trap occurs when the price breaks a significant resistance level, determining traders to enter long positions in anticipation that the price will continue higher. After the initial break, the pair reverses direction, causing the buyers to be “trapped”. This behavior may happen at S/R levels on the lower timeframes as well.
During our last post, we talked about the bullish divergence that’s present on the chart: the price is making a lower low while the RSI is making a higher low. As we’ve seen, the price did climb after the divergence but this technical setup is still in play, meaning that it could still drive the price higher.
Support sits at $18,500, while the key level at $20,000 will provide resistance (there are multiple S/R levels on the lower timeframes). The Core PCE Price Index for the U.S. economy is scheduled for release today at 12:30 pm GMT and this will probably be the deciding factor for the pair’s next direction.
