XLM deflates after 55 percent rally, Bitcoin traps sellers
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September 20, 2019
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Stellar Price Pulls Back From Two-Month Highs

XLM/BTC: Price: 746 sats | MCAP: 148,774 BTC  | Maximum Gain: +9.80%

Why we were intrigued:

XLM/BTC rallied 55 percent in the first half of the week to hit a high of 0.0899, a level last seen on July 22. The sharp rise caught many by surprise and left the cryptocurrency overbought on technical charts. 

Notably, on Thursday, the hourly chart was reporting a bearish divergence of the relative strength index. A bearish divergence occurs when the indicator charts lower highs, contradicting the higher highs on price. 

It is widely considered an early warning of an impending bearish reversal. Further, XLM/BTC had charted a bearish doji reversal on the hourly chart on Thursday. 

Hence, a short XLM/BTC call was initiated on CoinDeskDojo during the U.S. trading hours yesterday. At that time, XLM was trading at 837 sats. 

Prices slipped to our target of 755 sats and extended losses to hit a low of 734 sats during the Asian trading hours today. 

As of now, XLM/BTC is changing hands at 746 sats. Despite the pullback, the outlook as per the daily chart remains bullish, given the cryptocurrency is holding well above the former resistance-turned-support of 700 sats and the 5- and 10-day moving averages are trending north. 

A strong bounce from 700 sats could yield retest of recent highs near 900 sats. 

The Trade



The Result 

Quick Exit Ensured There Was No Loss

BTC/USD: Price: $10,200 | MCAP: $183.42 | Maximum Loss: Nil

Why we were intrigued:

Bitcoin fell to an 18-month low of $9,600 on Bitstamp during the Asian trading hours on Thursday. 

The price drop bolstered the bearish setup on the 4-hour chart: a failed falling wedge breakout followed by a bearish lower high and a drop below key support of $9,855. 

As a result, the cryptocurrency was looking weak and primed for a deeper drop to levels below $9,500. So, a short call was initiated in the European trading hours on Thursday, when BTC was trading around $9,800. 

The analyst recommended selling BTC above $9,900 as the hourly chart relative strength index (RSI) was reporting oversold conditions. 

As expected, BTC bounced to $9,900, but the expected sell-off from that level never happened. The cryptocurrency remained flat lined for a few hours amid the rise in ether and other alternative cryptocurrencies, weakening the immediate bearish case. So, our analyst asked Dojo members to square off the short positions at cost. 

Currently, BTC is changing hands above $10,200. Thursday's bullish hammer candle would gain credence if prices rise above $10,380 (hammer's high) today. That will likely invite stronger buying pressure, yielding a test of key resistances in the range of $10,900-$11,000.

The Trade



 

The Result 
 

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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