Technical experts suggest broader crypto correction, in line with more Hawkish Fed
A big macro week is ahead with a lot of central bank meetings, but the focus is obviously on the Fed and forward guidance. For crypto, it will be the effect this has on the US stock market, but especially the Nasdaq.
Macro vs technical
A big macro week is ahead with a lot of central bank meetings, but the focus is obviously on the Fed and forward guidance. For crypto, it will be the effect this has on the US stock market, but especially the Nasdaq.
As Dalvir highlights, bitcoin and the Nasdaq remain positively correlated, and recent big tech earnings have supported the index. However, a more hawkish Fed is likely to see equity markets come back under pressure, and that is the biggest risk for Dominique. That would certainly fit with the technical studies, which see the risk of a wider correction at this stage.
Ethereum vs Bitcoin
Last week, my studies suggested that we entered a corrective pullback after the aggressive reversal from 0.062, back through the March breakout levels. This correction is now in the Fibonacci support region between 0.065 and 0.064. As such, we should start looking for a higher low to develop, a reversal back through 0.067 and then 0.070 opening a run up to the 0.075 highs.
This view is wrong on a break of 0.064 and then 0.062, such a move opens 0.057.
Bitcoin
Prices remain in a correction phase after the peak up to ~31,000. So far, the pullback has held over the previous 4th wave and Fibonacci support in the 26,645 region. We are now faced with two options. We remain in a choppy area between that support and the highs for a while and then break higher to the next resistance in the 33,000 region. Or we break that support and see a deeper correction back towards the 25,400 weekly support before we should look for signs of a higher low. It is difficult to say which correction phase will play out at this stage.
A decline and close below 25,400 would suggest that 31,000 was a more significant top than my studies currently suggest and risk a wider pullback towards 19,500 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.
A decline back through 19,500 would negate and signal that the entire move up to around 30,000 has just been a 3-wave correction process and we are likely to remain in a sideways and choppy area between 15,000 and 30,000 for several months.
Ethereum
The short-term outlook has become more complicated. The reversal from just ahead of the 2166 resistance extended again this week to see the support test in the 1800-1715 region, which has so far held. So from a trend-following perspective, important support has held. However, from an Elliott Wave perspective, it is unclear whether the decline is still an A-wave, meaning a deeper pullback to at least 1714, if not 1660 over the next 2-3 weeks, or that the correction is complete.
The trend is getting the benefit of the doubt at this stage. But we should closely watch price action in the short term as if this is just a B-wave bounce, a lower high should develop at/below 1965-2065 resistance.
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. A decline back through 1400 negates this underlying bullish outlook, signaling that the gains have just been another 3-wave correction and keeping us in a broad but lower choppy area.
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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