Bitcoin (BTCUSD) (5-day/1-day)
Zooming out a bit on Bitcoin with a 5-day chart and a new bear range to add to the large bull range we’ve had in place for months, nothing is clear. There are clear bull & bear cases if certain levels break, but we are currently in a limbo of sorts.
Bulls so far are struggling to break into our orange “neutral” zone on our large bull range($42.2k-44.8k). Consolidation under this resistance could eventually lose support, but generally consolidation under resistance is thought of as a bullish sign. A candle close above $46.7k would be a key victory for bulls and bring $55k-58k back into play.
The biggest red flag on this bull range is the fact that our green “buy” zone was front-ran which can be a sign of a false rally. A rejection from this $42-44k area brings $25-29k bottom targets into play.
Zooming in slightly to the daily chart, for an ultra-bear scenario, which would likely take months to develop. The key level for bulls to hold here would be $39k. If that were to fail, we can expect to see $27-$31k get tested, and if that fails, $13.9-17.9k would be the next likely market bottom.
For Bulls, even on this bear range, if we see support step in at $39k, we could see a sweep of the recent $48k highs, with a possible range breakout to past $50k.
Anything below $50k could be a giant bull trap, and anything above $39k could be a huge bear trap.
Ethereum (ETHUSD) (5-day/1-day)
Ethereum’s 5-day chart looking slightly better, having actually reach the large green “buy” zone to bounce into the orange “neutral” one.
As long as $3k can hold, $3800-4200 is on the table. If $3k breaks, on a closing basis, we should be prepared for sub $2k level.
On our daily ranges, we can see that the recent low swept the 0.62 level on the smaller of the two- a good sign for short term bulls.
First targets from this bounce would be $3700-3900, which fits with our larger bear range on the daily chart, as well as our 5-day chart analysis. If $2600 breaks on a closing basis, we could see our next bottom targets from $1690-1985.
Fundamentals & Correlations (Weekly)
Bitcoin dominance (BTC.D) just continues to stay flat for months now, below 50% for roughly a year at this point. This is interesting, because we kind of expect one last rally from Bitcoin and a return to market dominance, even in smaller cycle periods. At this point, we’ve had “altseason” conditions for a year….it’s hard to imagine that this time is different could actually be true for once, but this does seem like a major market dynamics shift.
The US Dollar Index (DXY) keeps breaking through high-time-frame resistance levels, now approaching highs that aligned with the March 2020 “covid crash.” This is something to be very wary of. It is more important to be prepared to buy a bottom than it is to hold until an absolute top. With low liquidity in equities and crypto, we are seeing more violent swings in both directions, but there is more to be lost by being blindly bullish than cautiously prudent.
Trade safe, let the setups come to you. No FOMO.