Last week we said:
Markets have rallied away from their lows, and bullish divergences are beginning to form on low and medium timeframe charts. BTC and ETH may be hitting resistance on daily charts, but supports are converging across timeframes. The most likely scenario is a short-term pullback to support and a continued consolidation in this new higher range to regather momentum.
Our prediction of a short-term pullback and consolidation in this higher range have proven to be correct so far. Today BTC and ETH are trading down about 2% and 4% respectively, and have retraced to the support zones identified in last week’s analysis.
Will this support hold? Let’s take a look at the charts and find out.
Bitcoin Price Analysis
After failing to break resistance near $21.5k last week, BTC has retraced to the 4H 50SMA where it is now finding support. A bounce upward from here would confirm this rising support level. There is also a clear bullish divergence here as the moving averages are all in a bullish configuration. Support below $20.7k will be found at the 4H 100 SMA, priced around $20.4k.
Moving averages on the daily chart are still bearish, but a bullish divergence can be seen as BTC has broken above the 50 and 100SMA’s. The current pullback is to confirm the 100SMA as support, priced right around $20.64k. This support converges with the 4H support we identified above. A bounce here would be a clear case of resistance – turned support, which is bullish. The next resistance is at the 200SMA, priced at just under $24k.
BTC is continuing to grind upward on the weekly chart. It needs to break above the 200w SMA, also priced at just under $24k, in order to truly regain bullish momentum. This major resistance coincides with daily resistance levels – making it a strong resistance zone. It is unlikely that this resistance will break on the first attempt – meaning the most likely outcome is a continued consolidation pattern in this zone for weeks to come as BTC gains strength.
Ethereum Price Analysis
We will focus on ETH’s daily chart and fundamentals today. ETH is consolidating between the 100SMA and 200 SMA. The 100SMA has acted as strong support around $1500 while the 200 has acted as resistance just above $1600. This is a tightening range and ETH must choose a direction in the coming days. Support below is at $1400, while resistance above is around $1900-2k ( previous high).
ETH’s supply has expanded since the merge at an extremely small pace of 0.018% per year. This means that, even at the incredibly low network usage, nearly all emissions are being burned as transaction fees. If the market regains any momentum, the increase in gas will make ETH go net deflationary. Over a long period of time, this is incredibly bullish for ETH as the supply essentially has reached a soft cap.
BNB Price Analysis
BNB has been incredibly strong in recent weeks, with daily moving averages about to form a golden cross. Clear bullish divergence is also seen, with BNB breaking all resistances including the prior high set in August. This is majorly bullish for BNB as it has been outperforming the market by a wide margin.
BNB is currently pulling back after a major run upward. The previous high of around $330 will act as support and is being tested now. Below this, the 100SMA is support at $291.
We can see from BNB’s momentum indicators that the move up caused it to become heavily overbought. The pullback to support is a healthy one, and should not be cause for concern unless BNB falls below $290.
Market Sentiment
Investors are becoming less fearful as markets range sideways. This shows a rising level of optimism, which could potentially backfire. Still, the market is more fearful than greedy at this stage. Once again the most likely outcome here is consolidation.
Conclusion
Crypto markets are in a short-term pullback to confirm higher support zones. If these zones hold, it is bullish as markets will likely then enter a pattern of consolidation in these higher zones. BNB has been strongly outperforming the market and is strong above $290. Market fundamentals continue to improve for BTC and ETH, and investor sentiment is slowly turning more positive. So long as support holds and we have no black swans, consolidation and grinding upward is likely.
NFA. DYOR.
