BTC, ETH Hold Resistance on Rise to New Highs

Macro vs Technicals

The softer-than-expected inflation print this week saw a dramatic pullback in US yields, helping the USD to extend lower and US equities to extend higher. However, it still leaves the market very split on whether the Fed is truly at the end of its rate hiking cycle, with Dominique still expecting two more hikes this year – one at the end of this month.

Crypto seemed to react far more to the Ripple news, but both Ethereum and Bitcoin are holding technical resistance levels and struggling to gain real momentum.

Ethereum vs Bitcoin

An interesting week ahead, as the correction phase continues but still holding the 0.064-0.065 resistance zone. The longer this area holds the more chance there is for another leg lower to next Fibonacci support region around 0.057.

A clear break and close above 0.065 would suggest the recent range breakout was a false break and that we are reverting back into the previous range plus a gradual move back towards 0.068-0.071 within that process.

Bitcoin

Prices have developed into ‘flag’ type channel at these upper levels. My studies still suggest this is a 5^th wave within the short-term substructures with bear divergence in the momentum studies also warning downside risks are developing.

I still see the 31,000-33,000 area as strong resistance, and we should see at least a correction phase from here, potentially back to the 26,000-25,000 region. If prices do break this ‘flag’ resistance and 33,000, then there is room to further resistance around 36,000. But my studies do not suggest a move to the upper level now.

Long term, my studies suggest the bear cycle from the 2021 highs completed last year around 15,500. We are close to the first targets and resistance in the 33,000 region. As above, I am looking for this region to hold for now and a correction to develop. However, the very long-term targets are 42,000-48,000. To change this long-term outlook, we would need a decline through 19,500. Such a move would suggest we in a choppy range between 15,000 and 30,000 for several months.

Ethereum

The underlying wave structures are more bullish in Ethereum than in Bitcoin. I am therefore watching to see if the cross breaks the resistance highlighted above.

However, with Bitcoin in a potential topping phase and Ethereum up to an important Fibonacci resistance region around 2041, I am wary that both can see a correction while these resistance levels hold.

Such a correction in Ethereum should remain choppy and corrective in nature (in 3-waves) and ideally hold the 1830-1750 region (clearer supports can be achieved once the correction is underway) before another test higher.

An impulsive (5-wave) decline through 1750 and then the 1623 previous lows would negate the bullish outlook for now and suggest we are in a medium-term range, with 1400-1380 important medium-term support. A break and close above 2041 would suggest an extension to the 2141 highs and above there towards 2450.

From a longer-term perspective, the reversal from last year’s low has reached the lower region of resistance in the 2170-2450 zone. Once the current correction phase is complete, we should extend through this area opening 3000-3300. A decline back through 1623 is a worry to this view, but only back through 1370 negates this bigger-picture outlook, signalling the gains have just been another 3-wave correction and keeping us in a wide but lower choppy range, potentially into the end of 2023.

Robin is a global market veteran, with over 30 years of experience on the sell and buy-side, as a strategist and trader. He now provides strategic trading and investing advice to hedge funds, family offices, HNW individuals and trading desks around the globe.

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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)