4. Profit & Loss Calculation of Options
OKEx Technical Weekly: Mar 2, 2020
The cryptocurrency markets have initially stabilized after the prices of bitcoin plunged from 10000 levels to around 8500 over the weekend. In our last edition of Technical Weekly, we have highlighted the over-enthusiasm in the BTC market could jeopardize the rally and bring a negative impact on the price in the short-term. Since then, BTC has given up about 14% of value in a week and failed to maintain its support at the 200-day moving average.
Although the markets generally remained positive on BTC due to the upcoming halving, we believe the bias could still lean toward neutral/slightly negative in the short-term, as the shorting appetite seems relatively high. We saw the OKEx BTC Long/Short Ratio has off from recent highs but still at comparatively high levels (2.34) compared to the readings in early January (1.06~1.33).
That sentiment of indecision also reflected in the open interest and trade volume. We noticed that our BTC open interest has been dropping since mid-February, indicating that there was less new money flowing into the market. However, that could also mean the current price trend could come to an end. Besides, trade volume has started to turn lower, and that could imply traders have been holding their positions and could consider as a sign of stability of the price.
Markets have also braced for a soft start in the altcoin space, with ETH and XRP dropped about 2%, while XTZ and LINK gave up more than 6% in the early Asia trading. We’ve also seen an initial sign of stability in the altcoin space, as the Total Ex-BTC Crypto Market Cap seems able to maintain its support at the 365-day moving average. Altcoin watchers probably want to keep this chart under their radars.
BTCUSDT – Short-term rebound insight?
- BTCUSDT has failed to maintain the support at its critical 200-day moving average over the past week; however, indicators shown that the current condition could able to support a short-term rebound.
- We’ve seen a positive daily candlestick in the making, if confirmed, it will be the first after seven consecutive negative candlesticks. Pattern-wise, it could be developed into a morning star pattern similar to what happened in late November and mid-December (red boxes). Both cases showed a short-term rebound occurred after a morning star pattern.
- Momentum indicators also painted the same picture. Both the RSI and the ultimate oscillator were bottomed in the oversold area back in November and December cases. A similar situation also spotted recently, with the 9-day RSI at 29, and the UO touched 40.
- Although a short-term rebound is possible, however the medium-term price recovery could still questionable, and it’s way too early to call a real reversal.
- The 200-SMA could be the first level to watch, which is around the mid-8700 handles. If seen, the 38.2% Fibonacci retracement could see more resistance. Lower support at 8220 would be another reference.
ETHUSDT – A breakout in the making?
- ETHUSDT is still relatively in better shape than bitcoin and some other major altcoins as the pair still largely remains above its 200-day moving average.
- However, the recent price correction seems to put the pair in a daily descending triangle pattern, and a breakout appears due imminently, and it’s likely on the downside. If seen, it could set the price to retest the November highs of 195-198 levels. The anticipated breakout is also set to test the Jan-Feb trendline support.
- The momentum indicators suggested that the pair is still not yet oversold. Also, like BTC, OKEx ETH Long/Short Ratio remained at a relatively high level. The two factors strengthened a bearish for ETH.
- November high of 195-198 could be the first area to look at.
XRPSDT – More room to go down?
- XRPUSDT has already below its 200-day moving average for more than five days, a relatively weaker performance than ETH.
- The pair seems to have formed a head and shoulders pattern, which could be a sign of a medium-term bullish-to-bearish reversal.
- The pattern could allow the pair to retreat to around 0.175 levels, which aligns with the mid-December low. If such level is seen, that could evaporate the 2020 gains.
- While we don’t expect the price will plunge to such levels in a short period, and even some short-term rebound is allowed in the near-term. We believe 0.213 to 0.216 would be a key area to watch.
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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