Bitcoin (BTCUSD) (3-day/8-hour comparison)
Bitcoin is at a critical point. When looking at our 3-day chart, the smaller range still looks ok for bulls, although the lack of follow through from the first wick to $40k last month coupled with current stagnant price at these levels is concerning. We are now below our orange “neutral” zone in the larger range on the 3-day chart, which could also spell trouble for bulls, giving potential for a trip to the low $30ks in the larger green box.
Our 8 hour chart doesn’t look quite as bad, but we need to see some follow through reclaiming some high time frame supports. If we see buyers step in soon, we’d want to see price push up towards $45-46k. Even then, we will be looking at more stacked high time frame resistances all the way to the $69k top. Bulls have their work cut out for them at this point.
With many calling this the beginning of the Bear Market, and rampant fear, the contrarian view would be to start getting positioned for a reversal, but be careful. Beware of a potential dead cat bounce until we see some high time frame candle closes above $45k, and after that $55k.
Ethereum (ETHUSD) (3-day/8-hour comparison)
Ethereum is also in a dangerous spot. When we looking at the two ranges on our 3-day chart, we are still in the orange “neutral” zone on the larger range, but have been dribbling along it with no real reaction. The smaller range on the 3-day chart is just about invalid, with price at the bottom of the green “buy” zone, which now seems like it’s turning into a resistance. There haven’t been any high time frame candle closes below this box, so that’s the silver lining, but if we see a close below $3000, a retest of the $1635-$2227 zone is on the table.
On the 8-hour chart, we’ve broken through the green buy zone, and it now appears to be acting as resistance, with $2400 as the likely next stop unless we can get back above $3500.
Fundamentals & Correlations (Weekly)
BTC dominance (BTC.D) remains at 40% or lower, giving altcoins a lot of breathing room. We’ve seen most altcoins faring well even with the rough price action from BTC, and even some with inverse correlations, gaining traction as BTC moves down. We’ve talked a lot about a potential reversal on BTC.D, which would mean trouble for alts, and also would suggest that Bitcoin hasn’t topped yet on the macro view. This still seems like it could happen at any time, probably once BTC clears some high time frame resistances, and people begin to pile in.
The US Dollar Index (DXY) has been retracing towards our diagonal resistance to test it as support, and this has been giving some space for markets to breathe. The fact that the dollar has been cooling off while both crypto and legacy markets have been experiencing a lot of blood is concerning, and things could be even more bearish than they seem at first glance.