Bitcoin (BTCUSD) (1 Day)
It’s rocky times in the crypto markets as bears regain control for the time being. While we’ve seen some bulls show up for support, we’ve seen a rather consistent grind down. This is typical behavior to “fill the wick” on a volatile move like the one we’ve seen on December 4th.
With that said, high timeframe bull structure remains intact. As we range, we can clearly see retracing to OTE, or “optimal trade entry” on the local fib range, and we’ve tapped the 0.62 on the larger range with a good reaction. What this tells us is two things – traders should be patient and let the range “play out” before entering or exiting any positions, and that we are not technically in bear market territory yet. If bulls want to see a new ATH in the coming months, they have their work cut out for them. However, with the right trend established, the bull party could resume soon.
Ethereum (ETHUSD) (1-day)
Ethereum has shown substantial weakness in comparison to Bitcoin over recent days. This shouldn’t be a complete surprise as it’s had a tremendous run in recent months. However, ETH bulls need to show up soon or it could mean trouble in the medium term.
While the initial drop on the 4th took us down, it failed to reach the larger fib range’s OTE zone. While this was initially a sign of strength, we can clearly see it’s more rapidly “filling the wick” in more recent days and is grasping to hold on to the smaller range’s OTE zone.
For bulls to regain control, we would want to see the current zone being held and the daily candle closes remaining within it.
With that comes positive news – if BTC sees a further drop, ETH has a lot of room to fall without completely devastating the higher timeframe bullish structure.
Similar to BTC, bulls will have to get to work and grind through many resistances above for a glimpse of new ATH.
Fundamentals & Correlations (BTC.D 1-week, US DCI 1-month)
Bitcoin Dominance is remaining rock-steady at the bottom of its local range. What traders should derive from this is that there’s a higher likelihood of Bitcoin “stealing the show” and leaving ETH and the rest of the market behind for some time. If this is the case, it would spell trouble for alts across the board and extreme caution should be taken. To monitor this, traders should also see the ETHBTC chart, as that’s also a great indicator of broader alt market health in conjunction with Bitcoin Dominance.
As suspected in earlier reports, the US Dollar Currency Index continues its uptrend from the support it remained on for months. It certainly has room to run further, but outside factors will determine its next move. The further it grinds upwards, the more trouble it can be for assets across the board to appreciate further.