Cryptocurrency traders feel safer now

The cryptocurrencies are definitely on an uptrend now. After a two month downtrend which scared off the latecomers, altcoins have been only climbing in the last two weeks, so the downtrend is over and the uptrend has resumed, thank God. The USD is trying to imitate cryptocurrencies, but I don’t know if it will succeed.

The Uptrend Is in Place When the Lows Are Getting Higher

We can now say without hesitation that the trend has finally changed for cryptocurrencies. The lows are getting higher and the highs are getting higher too; that’s the price action we see on an uptrend accordforex signalsing to forex textbooks.

It’s true that we’re far from the highs in late December, but those were strange times. Cryptocurrencies surged in December during that gold rush for altcoins, doubling or tripling in value in a couple of weeks.

So, it will take some time until we see those elevated levels that we saw back in December. Now, the price action in cryptos has become more like normal forex trading. The moves are still large and the spreads are still too wide compared to the forex market, although they’re smaller than in the last two months.

Just like in forex, cryptos have formed an uptrend in the last two weeks. There have been pullbacks lower, but during these pullbacks we have seen buyers jumping in at previous support levels or at moving averages.

So, the trend is up and we are long on Bitcoin already. Bitcoin has broken above the $10,000 level as we explained on Friday. As you can see on the H1 chart above, that level turned into support as Bitcoin retraced down there yesterday and jumped off of it. Today, the support has been provided by the 100 SMA (green). So, the fear has worn off in the crypto market and now they are all crawling higher on an uptrend.

The $10,000 level has turned into support now

The USD Is Trying to Reverse the Trend Too

The US Dollar is also trying to form a reversal as well. It has been beaten up pretty badly for more than a year without good reason. I mean without a good fundamental or technical reason I mean. Technically, a decent retrace for a few months would have made sense for the Buck early in 2017, before the uptrend resumed.

Fundamentally, the Buck should be in the best place possible now. But, another fundamental aspect has kicked in early last year and that was politics. Trump wanted a weak Dollar, so the market is giving him a weak Dollar.

On Friday, the Buck made some new lows; USD/JPY broke below 105 while EUR/USD broke January highs and reached 1.2550s. Although, we saw a swift turnaround on Friday afternoon. USD/JPY bounced off the major support area at 105.00-105.50 and climbed above 106 again, while EUR/USD lost about 150 pips.

That could have been a position squaring from the buyers before the weekend, but it could also be a trend reversal. I know I have been calling for a trend reversal for the USD for quite some time, but this price action actually looks like a reversal.

How Do We Interpret the Price Action?

If we interpret it, EUR/USD buyers basically tried the upside one last time and now they have given up after shaking a few week stops above 1.25. The same goes for USD/JPY, sellers reached their target at the major support (105-105.50) and now we are seeing a reversal higher. Could this be the trend reversal we are waiting for? Time will tell.

Trades in Sight

Bearish USD/JPY

1. The trend is still bearish
2. The H1 chart is oversold and heading lower
3. The 100 SMA (green) is providing resistance

The retrace higher is complete

As we mentioned above, USD/JPY is reversing higher from the support area. But, the larger trend is still bearish. I don’t think the sellers will let go that easily, so we decided to take a small trade up here. We went short on this pair below the 100 SMA and are in profit now. Perhaps, if the sellers fail at the support area again, we will think about opening a long term buy signal.

In Conclusion

The economic data today is light, apart from a speech from the BOE chairman Carney. We will watch that speech closely since we have a long term sell signal in GBP/USD. The USD is trying to reverse the downtrend, but as I said, time will tell. In the meantime, I will be listening to some music from Enya “Only Time”.