As we mentioned on Monday, Bitcoin’s price will try to break out from the parallel channels and establish a new trend in the market. Yesterday, the price tried to overcome the upper line of the channel and climb above $48,000. This bullish signal might act as a spark for the recovery trend that will lead in the next period.
The next resistance level that Bitcoin must be able to take over is around $52,000 and the rise until $56,000. The price increase between those levels will indicate if there is enough momentum in the market to reach new high levels in the next period.
In the short-term view, we can see that the signals created from the moving averages were confirmed and the price ranging seems to stop for a while. The price jumped above the horizontal channels. If you believe that the market will gain some momentum, the price might continue to rise and reach higher levels, until $52,000.
If the ranging continues, we should expect a comeback in the previous zone, making it a perfect short-selling opportunity for the next hours. The accompanying volume will also determine the trend that will emerge from that.
The market is trying to consolidate around $4,000, which remains the main point that acts as a support level for the previous bullish period. During the previous month, a “head & shoulders” pattern, with a bottom level at $4,000. A “head & shoulders” pattern usually indicates that the market will experience a change in the trend.
If we consider that the market remained bullish until now, reaching an all-time high level of around $4,800, we might experience a bearish trend that will start below $4,000. A small dive was already found as the market corrected at $3,700. But the market found new support levels around $4,000. If this support level holds for now, without any rebalances, we should expect a market consolidation around this price.
If the consolidation continues to exist, the breakout will be the next move in the market, and must expect a turnaround in a more solid situation. The need for some fundamental analysis is sure and for this reason, we need to clarify the main drivers behind Ethereum’s fundamental elements.
From my perspective, Ethereum’s best driver for fundamental growth is the number of altcoins and new markets is based on it and how much they can grow. For this reason, we should make some back-propagation and start exploring projects based on Ethereum and how much value they deliver on that. Of course, the NFT market (which is also fueled by Ethereum, at least for a big part), has played an important role in the uptrend. The positive fundamentals along with burning some tokens in the recent period are making the market look more optimistic than ever before.
On the short-term chart, we should take into account and look for the consolidation length around $4,000. If the consolidation starts and goes for a long time (at least 1 week), the breakout point will be evident immediately. Also, the breakout (if the consolidation takes more than a week) will be forced from external powers. The external powers will be an overall uptrend or downtrend in the crypto market or a fundamental change in the Ethereum-based apps.
The expectations are not high for the current period as the moving averages are still positioned in a bearish formation, indicating that the market is not ready yet for a positive breakout. The trading volumes are on the same track as they don’t have any spikes in the recent month.
The day-trading perspective in the Ethereum market has not enough signals to occur in the 4 hours period. What we can observe is that the market tried to climb again towards the $4,000 point, maximizing the volatility, especially in the bottom line on December 16. The volatility was decreasing once the market reached the $4,000 level again but we can expect that a similar positioning will occur if the price derives from the consolidation point around $4,000. So look after the breakout, as many opportunities can occur and exploit them for profit.
Regarding the Fibonacci bands, we can see that the price is moving in the positive zone, indicating that the bulls will have the upper hand in this situation and could drive the market at higher levels, regardless of the previous situation.
MACD index has approached the zero line, indicating that the market has grown some momentum but there is a need for more to pass in the bullish trend. The momentum factor is crucial for altcoins as they derive part of their value from the overall situation in the crypto market. As momentum approaches zero, the price will not move to higher or lower levels.
The RSI index moves around values 45 and 50, meaning that the price will remain on the same levels, with a potential move towards the bullish side. This is not evident yet but we should take a close look at that for future signals or reference.
We should also notice that the correlation between Ethereum and Bitcoin has remained around 0.78, indicating that the markets are taking a closer approach in the price formation process.
Bitcoin has managed to perform a minor breakout from the parallel channels, drawing an optimistic light shine for the next period. The day-trading signals were confirmed and we are ready for the next signals that will shape our strategy.
Ethereum has managed to sustain the $4,000 level as the high levels will continue to dominate for the next days as we might experience a consolidating period for the next period, that will lead us in the next trend, bullish or bearish. The upside or downside will be determined through more indicators to be considered in our analysis.
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