The macro backdrop has been complicated by the US debt ceiling debacle. However, on the basis that it gets resolved, recent data has pushed market pricing back towards further tightening from the Fed and he risk we are still in between mid-late cycle…
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
The macro backdrop has been complicated by the US debt ceiling debacle. However, on the basis that it gets resolved, recent data has pushed market pricing back towards further tightening from the Fed and the risk we are still in between mid-late cycle, with another 25bps baked into June and only the slight risk of a cut by the end of this year.
US equities have continued to perform well, led by the Nasdaq, but as Dalvir points out there is a negative correlation with the USD (which has been staging a strong recovery). Hence, Crypto is potentially caught between the two. However, the technical outlook is more for Crypto to play catch-up in the coming week/s with the risk on equity move.
Ethereum vs Bitcoin
Another week or tracking sideways to slightly higher. As such, no change to the bullish outlook after holding and reversing higher from Fibonacci support around 0.062. Targets are for an eventual move back towards the previous range highs. A break of trend line resistance at 0.06838 should open the next leg higher in the cross to 0.075-0.078.
This outlook is wrong on a break of 0.064 and then 0.062, such a move opening 0.057.
Another week of sideways action, leaving the view unchanged. The correction phase from the 31,000 spike high has extended in wave C. This still has the potential for a push to the 25,500-25,000 weekly trend and pivot support region while under 27,700 resistance. However, my studies look for a higher low to develop around there. We should then see a bounce and further range trading develop before new highs, or a move straight back to new highs in the coming weeks, targeting next resistance in the 33,000 region.
A rally back through 27,700 near-term pivot resistance signals that higher low is already in place and we can work back to the recent highs as part of an ongoing range, or just straight to new highs.
A collapse through this support would be the first warning sign that isn’t the case and opens the risk for a move to 22,000-20,000. Longer 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 the 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. A decline back through 19,500 would negate and signal the whole move up to around 30,000 has just been a 3-wave correction process and we are likely to remain in a side and choppy range between 15,000 and 30,000 for a number of months.
As with Bitcoin the pullback from the 2125 high is viewed as a 3-wave correction, with the market now in wave C. While under 1850 pivot resistance there is still the risk that we see the C wave extend towards 1720-1650 support. However, my studies suggest rebuilding longs from here and adding down into that area of support. A rally through 1850 suggests that higher low is already in place.
A collapse through and close below 1650 would be the first warning this outlook is wrong and risk a much deeper setback towards the 1370 March lows. Longer term, 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 underlying bullish outlook, signalling the gains have just been another 3-wave correction and keeping us in a wide but lower choppy range.