Beware Of Temporary Bitcoin Distractions

October 10, 2019 in Bitcoin


Bitcoin (BTC) and Ethereum (ETH) both made big moves in the last 24 hours that led to a massive stop hunt especially on ETH/USD. The charts show that we have a decline in the offing that would be particularly devastating for altcoins. However, before we discuss that let us talk about the big picture. If we zoom out and look at the charts, we can see that nothing has changed. Despite the recent manipulation that shook out many of the retail bears, the bearish setup remains intact. If we look at the BTC/USD chart, we have seen two large descending triangles being invalidated because they were too obvious but the price has now entered an even larger descending triangle.

The daily chart for ETH/USD shows that the price broke below a key symmetrical triangle and is now eyeing further downside. This could be the beginning of the downtrend for Ethereum (ETH) but I wouldn’t discount another move to the upside to form another top especially now that Ethereum Dominance (ETH.D) has room for further upside. If it eyes a test of the 200 day EMA from current levels then I would expect Ethereum (ETH) to rally higher. Bitcoin dominance (BTC.D) would be important to watch at current levels because it is trading within a falling wedge that could soon break to the upside. The most probable scenario that I expect that happening in would be a strong decline in the market and Bitcoin (BTC) holding its ground better than other cryptocurrencies.

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We maintain that the recent moves in the cryptocurrency market have not changed anything. Developments in major financial markets like the S&P 500 (SPX) and the Russell 2000 (RUT) still point to more blood ahead and these recent moves are just orchestrated attempts to discourage traders from shorting the market just when the big move is around the corner. The daily chart for EUR/USD shows that the pair succeeded in making a break towards the 50 day EMA but it has done this before and we have seen a sharp decline after it failed to break past the 50 day EMA.

Lastly, let us take a look at two charts that I think matter the most. The daily chart for BTC/USD that goes back to 2016 and the daily chart for ETH/USD that goes back to December, 2018. If we sketch a trend line on the BTC/USD chart that goes back to 2016, we can see that this is the line that the price has been finding support and resistance on at multiple points. We can see that the price has been respecting this line throughout and it has been of immense significance. This is why whether you are bullish or bearish, this line is what you need to focus on and you are inherently inclined towards the price either breaking above this line or facing a rejection and continuing downwards. The same goes for Ethereum (ETH) and whichever way the price swings from here would have serious implications for a long time.



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