Trade Recommendation: Bitcoin Cash/Ethereum
The Monero/Ethereum pair (XMR/ETH) lost over 50% of its value this year when it went as low as 0.22493 on June 22, 2018. However, it appears that the worst is over for the pair. In fact, XMR/ETH is gearing up for a reversal.
Technical analysis show that Monero/Ethereum is creating an inverse head and shoulders reversal pattern. This structure is not readily visible on the daily chart but switch to the 4-hour chart and the pattern becomes apparent. We think that a breakout is highly probable for the following reasons.
First, volume surged on the 4-hour chart when XMR/ETH defended 0.28. This is a very good sign that a bullish higher low has been established. This tells us that market participants are willing to buy positions at a higher price.
On top of that, a hidden bullish divergence can be seen on the 4-hour RSI. Plus, the 4-hour MACD is flashing a bullish cross. These indicators suggest that the market is gaining strength.
Lastly, the 4-day, 8-day, and 21-day moving averages are all lining up below the body of the 4-hour candle. All of them are trending up. These moving averages are very likely to carry XMR/ETH above resistance of 0.30.
The strategy is to buy the breakout at 0.30 as long as the pair generates volume of at least 6,200 Monero. Those who bought the higher low of 0.265 are likely to take profits at the resistance. The pair needs buyers to absorb the selling pressure. Once breakout is complete, XMR/ETH may rally to our target of 0.37.
The process may take a month.
Daily Chart of XMR/ETH on Binance
As of this writing, the Monero/Ethereum pair is trading at 0.28311 on Binance.
Summary of Strategy
Buy: Breakout at 0.30 after volume of 6,200 Monero is met.
Stop: 0.294 after the breakout.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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