Cryptocurrencies continued their recovery from deep losses experienced over the last month but have seen a retracement over recent sessions. The positive sentiment has been helped by new developments in South Korea, where the regulator changed its tough stance on cryptocurrency trade and indicated that they plan to normalize the virtual coin business in a self-regulatory environment. However, this week Bank of England Governor Mark Carney was the latest official to denounce Bitcoin, saying it doesn’t represent a store of value because no one is using it as a medium of exchange but he remained positive about the underlying blockchain technology.
In the 4-hourly timeframe, the inverted head and shoulder pattern identified in the previous report played out, but BTCUSD found resistance at the trend line from the highs in December. The cryptocurrency dipped below the psychologically important 10,000 level in recent trade, where some support may emerge. Should a recovery ensue, a break of trend line resistance and 38.2% Fibonacci at 11,300 would put the bulls back in control and complete the formation of a possible larger inverted head and shoulders pattern. However, if BTCUSD fails to hold above 10,000, a visit to the 8,000 level cannot be ruled out.
One of the strongest charts is that of Litecoin, which has had a decisive upside breakout. The breakout came after news that Litecoin is positioning itself as a medium for payments and is set to launch its payment processor called LitePay. In the 4-hourly timeframe, LTCUSD has broken out of a falling wedge and is trading above the 23.6% Fibonacci retracement level and 200MA at 175. Upside is capped by resistance near the 224 level and a break would target the 50% retracement at 260. A reversal below 175 would lead to another test of the lows, with initial support at 145.