It is also not surprising that the price action of BTC and ETH and the market structure on the lower timeframes also look identical.
So yes, the markets have regained their recent gains on the back of the bad news, but has anything really changed? Bitcoin is still trading in a clear range; Ether is doing the same, and none of the assets have posted new yearly lows recently.
As the saying goes, when in doubt, zoom out. So, let’s do it briefly and take a better look at the Earth’s landscape.
When in doubt, zoom out!
On the weekly time frame, Bitcoin is still bouncing in a falling wedge, which is a classic technical analysis pattern with a bullish bias. The price is pretty much doing what one would expect the price to be in the framework of technical analysis.
There is expected resistance at the 20-MA, which lines up with a bearish trend line. The volume profile metric is showing the bulk of the activity in the $18,000-$22,500 range, and the lower arm of the falling wedge has so far acted as support.
Similar price action was seen in May 2021 – July 2021, but of course, the situations were very different, so this is some comparison between apples and oranges. There is divergence between the MACD and the RSI. In short, the price is heading down, and the MACD and RSI are heading up on the weekly time frame, which is worth paying attention to.
BTC/USDT 1-week chart. Source: TradingView
What I like about the weekly time frame is that the candles form slowly, and it is very easy to call and confirm trends, whether they are bullish or bearish. It is easier to build a solid investment thesis for the weekly time frame than to spend endless hours pouring over the four hour, one hour and day charts.
Related: Ethereum and Litecoin make a move, while Bitcoin price is looking for a firmer base
Anyway, breakouts from the falling wedge are likely to be capped at the descending trend line, while a breakdown of the pattern or a drop below the lower support level could lead the price to $11,400. This is all within the market consensus for most analysts.
As for ether, as I covered in more detail in Substack and newsletter last week, it is still doing the bullish pennant action: bouncing between support and resistance and seeing the breakouts capped at the major moving averages and the descending trendline of its bullish pennant.
$2,000 remains the ultimate target on most analysts’ radar, and the downside to $1,100 is far from shocking.
The drop below $1,000 is likely to raise eyebrows and attract the attention of those looking for more assertive shorts.
ETH/USDT 1-week chart. Source: TradingView
Ether price action basically does the same predictable thing as Bitcoin: nothing you see here, stick to the plan (whatever that means to you). Similar to BTC, there is also divergence on the MACD and RSI in ether – something worth paying attention to.
Last week, I also focused on Litecoin
Due to its upcoming network the reward is halved. While the price rebounded from its local high at $85, the uptrend remains intact, and on the daily timeframe, the GMMA indicator is still bright green.
LTC/USDT 1-week chart. Source. TradingView
The vertical black lines follow the bullish momentum of LTC leading to the halving and corrections that occur just after the halving occurs. For now, everything seems to be going according to plan.
Of course, none of this is financial advice. Make sure you do your research, calculate your risk, think about worst-case scenarios, weigh your ROI and take profit, and cut your loss areas a few days before you actually make a trade. Remember that 1:3 and 1:5 is the optimal risk-to-reward ratio that one should chase next.
Ignore short term FUD and price action. Minimize and build a strong thesis from that point of view.
This newsletter was written by Big Smokey, author of The Humble Pontificator Substack and Cointelegraph’s resident newsletter author. Every Friday, Big Smokey writes market insights, trending how-to, analysis and early research on potential emerging trends in the cryptocurrency market.