Bitcoin & Ethereum: cracks in the rally

[MongiIG]

The upward pressure in Bitcoin and Ethereum has eased somewhat; so far the recent retreat appears to be a consolidation within the broader uptrend and what are the key levels to watch?

 

Source: Bloomberg

 

Forex Market trend Bitcoin ETH/USD Ethereum BTC/USD

 Manish Jaradi | IG Analyst, Singapore | Publication date: Monday 15 May 2023 

The fall in Bitcoin and Ethereum below the last month’s low suggests that cracks have emerged in the multi-week rally.

So far, cryptocurrencies have been holding above key support levels, but unless upward momentum to picks up the downside risks are unlikely to dissipate.

BTC/USD monthly chart

 

Source: TradingView

Bitcoin: Consolidation within the uptrend

The broader trend in BTC/USD remains bullish, notwithstanding the recent consolidation, as the colour-coded candlestick charts based on trending/momentum indicators show.

BTC/USD daily chart*

 

Source: TradingView

Importantly, Bitcoin has been holding above a crucial cushion around 25300-26000 (including the 89-day moving average and the February 2023 high).

BTC/USD daily chart

 

Source: TradingView

To be fair, the hold above the support recently is not a guarantee that the retreat is over. Unless the psychological 30000 is crossed decisively, the retest of the 25300-26000 area can’t be ruled out.

ETH/USD daily chart*

 

Source: TradingView

Ethereum: early-May high is tough bar to cross

Like Bitcoin, ETH/USD’s broader outlook has been bullish. However, ETH/USD’s close last week below horizontal trendline support at about 1780 is a sign that the upward pressure is fading. Still, it is holding above the February highs of 1710-1740 (including the 89-day moving average).

Any break below 1710-1740 could expose downside risks toward the 200-day moving average (now at about 1560). On the upside, for the upward pressure to fade, ETH/USD needs to break above the May 6 high of 2019.

ETH/USD daily chart

 

Source: TradingView

^{*Note: In the above colour-coded candlestick charts, blue candles represent a Bullish phase. Red candles represent a Bearish phase. Grey candles serve as Consolidation phases (within a Bullish or a Bearish phase), but sometimes they tend to form at the end of a trend. Note: Candle colors are not predictive – they merely state what the current trend is. Indeed, the candle color can change in the next bar. False patterns can occur around the 200-period moving average, or around a support/resistance and/or in sideways/choppy market. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Users of the information do so at their own risk.}