A week ago, we experienced a strong sell-off that drove Bitcoin's price down to $60,000. At that time, as I wrote in the article titled “Buy when there’s blood in the streets”, I believed that based on several indicators I was monitoring, we had "reached a favorable risk-adjusted area in the market," suggesting that a near-term bottom was likely.
Since the Bitcoin halving event transpired, we have witnessed numerous altcoins rally. While the much-anticipated "sell the news" event did not materialize as catastrophically as some had predicted, Bitcoin, and consequently, the broader crypto market, remains in a precarious position.
I will provide an analysis of the price charts for BTCUSD and ETHUSD. Additionally, I will share my observations and thoughts on where they might be headed from their current levels.
BTCUSD Price Action
I always begin my analysis of the crypto markets by examining Bitcoin. As the cryptocurrency with the largest market capitalization, Bitcoin is the primary market mover, and many other cryptos are highly correlated with its price movements. Although there are often periods of dispersion, getting the directional call on Bitcoin wrong typically means being wrong about the broader market as well.
From a price action perspective, BTCUSD remains in full timeframe alignment (FTFA) to the downside across all significant timeframes I monitor, including daily, weekly, monthly, and quarterly. For those who have followed my previous works, I've often mentioned in previous analyses, that "nothing good ever happens when it's FTFA to the downside."
The chart above illustrates that the weekly open (represented by the purple line) has acted as decent resistance throughout the past week, with sellers more motivated to keep the price below that weekly opening level.
In the coming week, pay close attention to how BTCUSD trades in relation to the new weekly open. A potential daily inside bar reversal (IBR-S) pattern is setting up to the short side, which would align with the current full timeframe alignment (FTFA) to the downside 🔴.
However, if buyers can somehow manage to keep the week's candle green, there's a decent chance that BTCUSD could trade its way back to the monthly/quarterly open (indicated by the dark blue line) and ultimately reach the upper Bollinger Band around the $72,000 area.
From a weekly chart perspective, we witnessed a slight lower low this past week as short-sellers found liquidity at the previous week's lows. However, buyers stepped back in to defend the $60,000 level, preventing a further breakdown.
We are currently in a momentum down (momo down) sequence, as indicated by the outside bar and lower continuation bar formed this week. Moving forward, it will be crucial to monitor whether the momo down sequence continues with another lower low or if we see a potential momentum down reversal (MDR) should the price take out this week's highs.
Zooming out to the monthly and quarterly timeframes, we can clearly observe that BTCUSD is currently trading within an inside bar formation. This suggests that all the recent volatility surrounding geopolitical events and the halving is essentially consolidation within Bitcoin's broader uptrend.
For me, the key price action to watch for carefully are either a topping event similar to what we witnessed in Q4 of 2021 or a price action reversal, such as the price breaking below the prior quarter's low. So far, there's no indication of either of these conditions playing out.
ETHUSD Price Action
This past week, ETHUSD has been trading in full timeframe alignment (FTFA) to the downside 🔴. The lows of $2,791 established last week held this week, with the price action exhibiting a choppy consolidation period characterized by multiple overlapping bars, all trading within the mother bar set on April 13th.
We now have a momentum up (momo up) condition in place. As we enter the new week, it will be essential to watch out for a potential daily reversal that could pull the price back into FTFA to the downside 🔴.
The weekly chart for ETHUSD reveals a significant outside-inside bar pattern in play. It will be crucial to observe how the inside bar resolves, as the direction of the breakout will provide valuable insight into the market's sentiment.
As noted in the chart above, the monthly/quarterly open level has been acting as resistance. Should we witness an inside bar and upside breakout scenario, it will be interesting to see if buyers can successfully reclaim the monthly/quarterly open level.
Unlike BTCUSD, ETHUSD has triggered a reversal bar on the monthly chart, as indicated by breaking below the previous month's lows.
We have some poor market structure stemming from the momentum up (momo up) condition that triggered in November 2023. However, I'm wary here, as any material weakness could potentially lead ETHUSD to revisit the October 2023 1872 highs, putting Ethereum buyers in a world of hurt.
Finally the quarterly chart for ETHUSD displays an inside bar formation, signifying a period of consolidation within the broader trend.
At this juncture, there are no red flags to indicate that the bull market is under threat. However, I would be highly concerned if we observe ETHUSD setting up a reversal pattern and breaching the prior quarter's lows, as such a development could potentially mark the end of this bull market cycle.
Wrap Up
It's worth noting that market breadth has improved markedly, with 69% of Binance perpetual contracts now trading above their 8-day moving average and 11% above their 20-day moving average. While we have bounced quite a lot from the extreme 0% readings I highlighted in “Buy when there’s blood in the streets” we still remain some distance away from "overbought" conditions, leaving room for potential further upside.
However, the lack of robust momentum during the bounce from those lows is concerning, although this could simply be the effect of consolidation. At this juncture, the price action dictates that we remain vigilant and agile, especially if we see prices trading weakly and markedly below this week’s open.
If Bitcoin can consolidate further and hold its gains, this might present an opportunity for other badly beaten-down cryptocurrencies to recoup some of their losses. It will be interesting to observe which narratives and cryptocurrencies emerge as the new market leaders in the coming week.
Have a good week!
Houston
Disclaimer: This article serves a general purpose and is intended solely for informational and entertainment purposes. It should not be considered as financial advice or relied upon for making investment decisions.
Looking forward to reading more, Houston!