Have they run their course?

Bitcoin, BTC/USD, Ethereum, ETH/USD – Technical Outlook:

• Bitcoin is testing tough resistance, which has previously led to a retreat.
• The Ethereum rally seems to be losing steam.
• What is the outlook for BTC/USD and ETH/USD and key levels to watch?

BITCOIN SHORT TERM TECHNICAL OUTLOOK – NEUTRAL

Bitcoin’s pullback has met tough resistance, raising the risk of a pullback, or possibly a retest of the June low.

BTC/USD has maintained a gradual move higher in recent weeks, nicely guided by an upward-sloping channel from September. The upper end of the channel is an uptrend line (now at 21250) while the lower edge of the channel is another uptrend line (now at 18950). The top also coincides with the 89-day moving average – the August and September returns were capped by the moving average.

The two-step-forward-one-step-back type of recovery, similar to the corrections since mid-2022, means that the current pullback is no different from the previous dead cats. That is, the smaller rallies were corrective, rather than the start of a new uptrend.

BTC/USD Daily Chart

Chart created using TradingView

For the downward pressure to ease, BTC/USD must rise above key converged resistance at the 200-day moving average (now at about 23770) and the August high at 25201. Until then, the path of least resistance is sideways to the downside. Interim resistance is at the top in September at 22774.

From a glass-half-full perspective, the rally since September may well be part of the broader base-building process, typically classified by retesting lows and fragile/choppy returns. In this regard, BTC/USD needs to stay above the June low of 17590 for the base building view to remain intact. Immediate support is at Thursday’s low of 20040. Any break below the support would indicate that the short-term upward pressure has eased.

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ETHEREUM SHORT TERM TECHNICAL OUTLOOK – NEUTRAL

A negative momentum divergence (rising price associated with declining momentum) on the daily charts increases the odds that Ethereum’s recent rally may have run its course.

ETH/USD’s three-week rally is testing fairly strong resistance at the 200-day moving average, not too far from another ceiling at the September 1790 peak. As mentioned in the previous update, ETH/USD has also achieved price targets for the horizontal channel that was triggered at the end of October.

Daily chart for ETH/USD

Chart created using TradingView

Any break below last week’s low of 1502 would trigger a minor double top (October 29 and November 6), suggesting a potential drop towards 1350. However, there is strong support at the September-October lows of around 1193-1220.

— Posted by Manish Jaradi, Strategist for DailyFX.com