Chinese stocks led the way last week for global developed equity markets with the Shanghai Composite Index rising 89.86 or 2.81% to close at 3,289.02. Keep in mind though that Chinese markets were closed till Thursday and this performance reflects only two days of trading due to the Chinese New Year holiday.
Regulators FTSE 100 index was the one negative market.
Overall, equity markets continue their counter-trend rallies following generally sharp drops off IOTA was the worst performer last week, falling $0.39 or 18.4% to close at $1.71. Two weeks ago the IOT/USD pair broke out of a bullish descending wedge pattern, and last week it pulled back towards the top downtrend line of the pattern to test it as support. That process has not yet completed as a short-term downtrend (7-days) remains. Therefore, the expectation is for the cryptocurrency to turn back up once the pullback is complete.
Ethereum exhibited similar price behavior last week as it pulled back to its 100-day moving average support, $791.04, at last week’s low of $787.0. That followed a breakout of an internal downtrend line two weeks ago. Last week the ETH/USD pair was down $84.82 or 9.0% to end at $852.56.
Bitcoin: Watch for continued retracement lower to Fibonacci support levels
Bitcoin was the stronger performer last week, down only $29.90 or 0.30% to end at $10,166.10. Since hitting a bottom at $5,920 three weeks ago, the BTC/USD pair has rallied as much as 98.96% as of last week’s $11,780 high, 50% retracement. That rally included a breakout of an internal downtrend line.
Since hitting last week’s high Bitcoin has been pulling back. Next watch for support to be found that can turn the cryptocurrency back up for a second leg up off the $5,920 bottom and possibly get above last week’s high. The 61.8% Fibonacci retracement is at $8,158.96, and the 78.6% retracement is at $7,174.61. Watch for support to be seen at either of these price areas.
Bitcoin Cash: Looks to be heading lower
Bitcoin Cash continues to show relative weakness on a technical basis. Year-to-date it is the third weakest performer with a drop of 47.8%, and last week it fell $277.30 or 18.1% to end at 1,255.60. It broke out of its internal trend line two weeks ago and rallied into resistance at $1,636.80 before slipping into a retracement, which is where it remains. At that high, the BCH/USD pair was 118.24% above the bottom of the recent correction at $750.0. From the December peak of $4,000.1, the price had fallen 81.25% at that low.
Next watch for a continuation of the decline into potential support at the 61.8% Fibonacci retracement of $1,088.80, followed by the 78.6% retracement at $939.80. Once the pullback is complete, the cryptocurrency can be expected to further recover along with the rest of the cryptocurrency sector.
