As should be clear to most participants in the cryptocurrency trading game, it would appear as though the recent countertrend rally has begun to reveal itself as increasingly vulnerable. That’s the easy part of the analysis.
The hard part is trying to determine whether or not this is a viable pullback in the context of a continuing bounce or new upward trend.
As we examine the action in Bitcoin (BTC)and Ethereum (ETH), we will focus on the technicals at hand and attempt to make just such a determination.
- High: $7753.2
- Low: $7473.4
- Major Resistance Level: $8,000
- Hourly MACD: Deep Oversold
As we noted clearly in our recent work, the failure for Bitcoin (BTC)to push up to and possibly through its declining 200-day simple moving average – a clear point of resistance looming above its recent bounce – threw some cautionary cold water on the excitement surrounding this move higher.
Now, the big question is about where support levels lie. It is not only important to identify where the opportunities may be but to know where the failures are if indeed they are happening.
In other words, key support levels are useful not only because we can predict support may come in, but because, if we don’t see that support, it gives us further information about the stability of that market.
In this case, everyone will be watching for how the market responds to $7500, but the more important level to us is actually at $7225, where the last key pivot was when Bitcoin (BTC)found support and took off to the upside. That was on July 20.
Beneath that, we have a rising 50-day simple moving average that will begin to touch confluence with the $7000 level likely within the next few days.
- High: $434.43
- Low: $412.17
- Major Resistance Level: $500
- Hourly MACD: Deep Oversold
Of all of the dynamics that worried us during the recent bullish move in the cryptocurrency complex, we noted in our recent writing that the failure of Ethereum (ETH) to take a leadership role was probably the most striking and troubling.
After all, Ethereum (ETH)is really the spirit of the future of the complex in terms of the blossoming of the blockchain and cryptocurrency concepts in society as a smart contract disruption mechanism for all of the trappings of contract law. This is the broad “phase three coin” thesis that has so much money pouring into newly established cryptocurrency hedge funds every day.
This is the quote-unquote big idea at this point. Hence, one imagines that a new inflection into the green shoots of a true bull market context for cryptocurrencies will likely be led by Ethereum (ETH).
However, this is far from what we have seen during this bounce, and that picture is worsening at this point dramatically.
The key level to watch here is clearly at $400.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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Charts courtesy of tradingview.com