Crypto pullback still looks corrective, with long positioning reduced

Macro vs technical

While the macro environment remains complicated, recent higher inflation readings from the UK and stronger than expected US PMI readings keep the focus on central banks still in tightening mode.

However, this has not affected US stocks at this stage. So, despite technical warning of another pullback, it’s hard to see what triggered the sharp reversal in crypto, but once it got going, it triggered long liquidations that Dalvir highlights.

At this stage, the pullback technically still looks corrective within the underlying new bull phase, and long liquidations are generally a healthy outcome for a bull trend as investors look to re-enter. As the old saying goes, you have to feed the bull, but a bear will fall under its own weight’.

Ethereum vs Bitcoin

The aggressive reversal from 0.062, back through the March breakout level, suggests we are moving back to the previous range environment. In the short term, however, we are in a correction phase of this reversal.

As such, my studies suggest that we may still see a pullback into Fibonacci support between 0.065 and 0.064. From there we should look for a higher low to develop and a return up to the old triangle highs around 0.070-0.075.

Bitcoin

The well highlighted break of 30,000 has now seen the bitcoin price move into another correction phase, which my studies warned about last week. At the time of writing, this is testing upper support in the 28,000-26,500 region.

Daily momentum studies are now completely discontinued from overbought. As such, the downside should be limited to this zone, a higher low should develop, and the next rally phase should take hold over the coming week or so. A decline through 26,500 would be the first alarm bell, while a further decline through 25,400 would suggest that 31,000 was a more significant top than my studies currently suggest and risk a wider pullback to 20,000-18,000 again.

Longer term, my studies suggest that the bear cycle from the 2021 highs completed last year, around 15,500.

The first target and resistance in the bull movement lies in the 33,000 region. But the main target is 36,000, that’s 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

As with bitcoin, but in a far more aggressive manner this week, ethereum has also turned into another correction phase from just ahead of the 2166 resistance. The decline in the micro term here appears to have developed in 5 waves and suggests that this week’s move was an A wave with a broader correction.

As such, the risk is that the returns are limited before a test of the Fibonacci and previous range high resistance in the 1800-1700 region. That should provide decent support for a higher low to develop, while a break there would increase the risk of the mid-April 2088 high being a more significant top than my studies currently suggest – risking a move back to around 1400 again .

In the longer term, the reversal from last year’s lowest target ~2400/2450 is resistance, but through that it can 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.)

Enter your email address to read this Macro Hive Exclusive

OR

START 30-DAY FREE TRIAL

Already have a Macro Hive Prime account? Sign in