Crypto is entering the next bull phase, with pullbacks to remain corrective

Macro vs technical

The macro environment remains complicated. Although the banking crisis seems to have subsided for now, the market is still struggling with the view that the Fed will have to cut interest rates in the second half of the year. US credit default swaps have risen steadily for some time, the USD has come under pressure, while interest rates have been in a range in recent weeks, but threaten to see further interest rate breaks. Meanwhile, the Nasdaq and big tech have performed well, while the Russell 200 has taken most of the pain.

Crypto seems to be playing its own game, with, as Dalvir highlights, support from the successful Shapella upgrade. The charts see some two-way corrective price action in the sessions ahead, but the underlying bull trend has room to continue.

Ethereum vs Bitcoin

Wild swings over the past couple of weeks have resulted in the ratio moving aggressively back to the 0.067-0.68 resistance area. The nature of the move, after consistently holding Fibonacci support around 0.63, suggests that we have developed a higher low earlier than expected. The ratio should now be limited by pullback to around 0.066/0.065 for a move to around 0.073 and then into a range trade again.

Bitcoin

After a three-week consolidation phase, prices are seeing the extension higher we’ve been looking for, continuing the reversal from the ~15,500 lows of late last year. In the short term, my studies suggest that a micro 5 wave cycle completes with this rally, with intraday studies at extreme overbought levels. As such, there is a high risk of another pullback before the move is extended. Short-term support is around 29,400-28,700. It is the ideal region to develop a higher low. However, not only will there be a break in support, but then 27,400 and 25,400 key trend supports will suggest that the entire rally phase is a false head and shoulders break.

Until then, the underlying outlook remains bullish following the bear cycle from the 2021 highs completed last year at ~15,500.

The first targets and resistance are in the 33,000 region, but the main target is 36,000, i.e. Fibonacci and the head and shoulders projection. I suspect we see the region holding on to the first test, but ultra-long term targets are 42,000-48,000.

Ethereum

Following the recent consolidation, prices are seeing the move higher we’ve been looking for, accelerating back into the market leader role after breaking the velocity line resistance. The break of last August’s peaks in 2020 also takes us into the next phase of the bull’s recovery.

As such, pullbacks should remain choppy and corrective in nature, holding back rising trend support in the 1950-1800 region. A decline there would indicate that this has been a false break and return to the previous area around 1600.

Until then, the larger image wave C is initially targeting ~2400/2450 resistance, but can thereby extend towards 3000-3300.

Robin is a global market veteran, with over 30 years of experience on the sell and buy side, as a strategist and trader. He now provides strategic trading and investment advice to hedge funds, family offices, HNW individuals and trading desks worldwide.

Image credit: depositphotos.com

(The commentary in the article above does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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