Bitcoin (BTCUSD) (3-day / 8-hour Comparison)
Another week has passed, and Bitcoin’s price movement has been minimal since our last market update.
We’ve seen price inch upwards in the red “danger zone” we see on the 8hr chart on the right, and still no sign of rejection. This is consolidation under resistance and is typically thought of as bullish. When looking at the 3-day candle chart on the left, which closes tonight at 0:00 UTC, bulls appear close to breaking out. If tonight’s close can manage to beat the previous high, it seems that expansion to the upside is on the table. On the other hand, a rejection from anywhere in the $61k-$65k range could spell disaster for any recent FOMO buyers.
If a rejection comes around these levels, it will be a harsh one. A 15-20% drop before a true breakout is a scenario we should be prepared for, but for now, bulls appear to be in control. As always, be prepared for anything and always manage risk.
Ethereum (ETHUSD) (3-day / 8-hour Comparison)
Ethereum had a much more eventful week than Bitcoin as it appears on the verge of a major move to the upside. A higher timeframe candle close above $2200 would be confirmation. Until then, we are consolidating under resistance, with the recent high tapping the “takeout” fib extension level (red line, 3-day chart). This remains a pivotal zone to be watched. A higher timeframe candle close above it would mean we have a high timeframe breakout on our hands, with the next resistance at $2,449 and the $3,000+ area. However, failure to surpass this “takeout” level would likely mean we see a very harsh rejection, knocking ETH back towards $1500 or lower.
Similar to BTC, ETHUSD remains at a crossroads and traders should be prepared accordingly.
Fundamentals & Correlations
Looking once again at the Bitcoin Dominance Chart (BTC.D) and the US Dollar Currency Index chart (DXY), we can see two things:
- Bitcoin is losing market share to other cryptocurrencies.
- The US dollar appears to have been rejected at this resistance level marked with the white dotted line.
What can we infer from these observations? Nothing too major at this point, but both do bode well for the greater crypto market as a whole.
BTC.D is getting closer than it has been in a long time to the <51% levels needed for the mythical “altszn” we’ve witnessed in the past. While the past week has seen some tremendous gains on altcoins, greater expansion could be ahead. If this level is breached, it will be evidence on a technical level of capital leaving bitcoin and flowing elsewhere within the market. It will also be a signal for a lot of traders to indiscriminately allocate their capital towards any and all altcoins they can, becoming somewhat of a self-fulfilling prophecy.
The DXY rejection looks good for a potential price increase in anything priced in US Dollars. A higher timeframe candle close below the lower yellow diagonal support on DXY would be a bullish indicator for crypto as a whole in addition to equities and commodities.
