Momentum Reversal Re-Energizes Bullish Crypto Outlook
- By Robin Wilkin
- 2 min read
My studies last week increased the risks that we were developing into a lower-range environment. But the aggressive rally this week re-energizes the bullish outlook, targeting new highs for the year in the coming weeks.
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Macro vs Technicals
My studies last week increased the risks that we were developing into a lower-range environment. But the aggressive rally this week re-energizes the bullish outlook, targeting new highs for the year in the coming weeks. The macro backdrop is having little effect at the moment, remaining negatively correlated. However, I would view a positive stock market as a tailwind for crypto now, while we would need to see an aggressive risk-off move in the Nasdaq to worry crypto markets.
Ethereum vs Bitcoin
Last week the outlook flipped to a more bearish stance, looking for a re-test of the range lows after the failure to break through range resistance at 0.0708. We are now at the range lows. And while momentum is oversold and suggests a bounce, the impulsive nature of the move to this region suggests rebounds will be muted and we breakdown to next Fibonacci support around 0.057. A move back through 0.065/0.066 is needed to negate those downside risks and confirm we are still in the current range environment.
Bitcoin
The breakdown last week through pivot support at 25,350 threw a bit of a curve ball in, suggesting we could just remain in a range. However, we were still holding channel support, and the underlying wave counts remained bullish. But the 15+% rally in a matter of days was impressive, to say the least. This re-energizes the bullish outlook with the break of channel resistance and momentum into bull mode. Pullbacks should remain choppy and corrective in nature. They should not at this stage drop back through 27,000. While over that support, we should see an extension into the 33,000-36,000 resistance window and then review.
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
As with Bitcoin, the breakdown through 1740 and 1714 created some worries around the short/medium-term outlook and whether we are actually in a range for longer. The impulsive rally back through wedge resistance re-energizes the underlying bullish outlook.
However, while Bitcoin targets new highs, it is less clear at this stage whether Ethereum will do so. Watch the range lows in the spread for guidance on that. For now, though, while over 1765 support, we should see a further move up to next resistance in the 2050 area, if not a test of the highs.
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 1370 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, potentially into the end of 2023.