One market risk has been taken away with the agreement to raise the debt ceiling. Yet, the recent data leaves it more likely the Fed will remain on hold in June as they have suggested although recent Fed comments have been mixed in regard to hike or hold.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
Macro vs Technicals
One market risk has been taken away with the agreement to raise the debt ceiling. Yet, the recent data leaves it more likely the Fed will remain on hold in June, although recent Fed comments have been mixed regarding hike or hold.
The US bond market is leaning again towards hold and still looking for the Fed pivot to cutting further out, with US yields reversing lower this week and the USD pulling back too. A particular focus should remain on the Treasury General Account and whether this provides a lift to equities, as Dominique expects, and a support for crypto. While crypto has failed to build on the recent near-term range breaks, the underlying outlook remains bullish at this stage, with Ethereum remaining the leader.
Ethereum vs Bitcoin
No change here as the cross continues to grind higher after breaking pivot and trend line resistance. Support now comes in at 0.6810-0.6750. A move back through that support would suggest a return to a lower range. Until then, my studies remain bullish for an eventual move back towards the previous range highs. Ahead of the range highs, I am monitoring resistance levels ~0.07245 and then ~0.07525 for signs of consolidation or rally failure.
The near-term price action remains a little suspect at the moment, with the rally attempt this week coming back under pressure pretty quickly. A move back through this week’s highs of 28,446 should trigger an acceleration up to the 30,000-31,013 highs from April. Then we need to monitor whether that holds for a larger range, or we just break to new highs. While under 28,446, the failure this week leaves open the risk in the near-term of further sideways action and possibly even a dip to ~25,250 support before another attempt to base.
So, medium-term, I still view this region as a buy zone for an eventual move through 31,000 to the 33,000 region. Near-term, however, we risk further sideways action.
A collapse through 25,000 would be the first warning sign that isn’t the case and opens the risk for a move to 22,000-20,000.
Long-term, my studies suggest the bear cycle from the 2021 highs completed last year around 15,500. First targets and resistance in the bull move lies in the 33,000 region, but the main target is 36,000 (that being Fibonacci and head and shoulders projection). I suspect we see that region hold on the first test, but ultra 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 a number of months.
Ethereum continues to look more constructive than Bitcoin, reflected in the cross working higher still. The break of channel resistance has merely resulted in another pause, but pullbacks are holding support in the 1855-1850 region. A decline through there would suggest a rally failure and a return to a range environment for now. Until then, my studies remain bullish for a move back to 2000 Fibonacci resistance and then the 2112 highs. This may be part of a broader range, or we just move straight to new highs.
A collapse through and close below 1665 would be the first warning this outlook is wrong and risk a much deeper setback towards the 1370 March lows.
From a longer-term perspective, the reversal from last year’s lows targets ~2400/2450 resistance, but through there can extend towards 3000-3300. A decline back through 1400 negating this bigger picture outlook, signalling the gains have just been another 3-wave correction and keeping us in a wide but lower choppy range.