Bitcoin & Ethereum Week Ahead: Cracks in the Rally?

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

• Pushed upwards in Bitcoin and Ethereum has eased somewhat.
• So far, the recent pullback appears to be a consolidation within the broader uptrend.
• What are the most important levels to watch?

The fall in Bitcoin and Ethereum below last month’s lows suggests that cracks have appeared in the multi-week rally. So far, cryptocurrencies have held above key support levels, but with less upside momentum to address the downside, the risk is unlikely to dissipate.

BTC/USD Monthly Chart

Chart Created by Manish Jaradi using TradingView

BITCOIN: Consolidation within the uptrend

The broader trend in BTC/USD remains bullish, despite the recent consolidation, as shown by the color-coded candlestick charts based on trend/momentum indicators (first highlighted in January – see “Bitcoin Technical Outlook: BTC/USD Turns Bullish”, published in January 18).

BTC/USD Daily Chart

Chart Created by Manish Jaradi using TradingView; Notes at the bottom of the page.

Importantly, Bitcoin has held above a crucial cushion around 25300-26000 (including the 89-day moving average and the February 2023 high). See the previous update that highlighted the risk of a decline “Bitcoin & Ethereum Price Action: Is the Rally over?” published May 8.

BTC/USD Daily Chart

Chart Created by Manish Jaradi using TradingView

To be fair, the recent move above support is no guarantee that the retreat is over. Unless the psychological 30000 is decisively crossed, a retest of the 25300-26000 range cannot be ruled out.

Daily chart for ETH/USD

Chart Created by Manish Jaradi using TradingView; Notes at the bottom of the page.

ETHEREUM: The high in early May is difficult to cross

Like Bitcoin, ETH/USD’s broader outlook has been bullish. ETH/USD’s close last week below horizontal trendline support of approx. 1780 is, however, a sign that the upward pressure is easing. Still, it remains above the February highs of 1710-1740 (including the 89-day moving average).

Daily chart for ETH/USD

Chart Created by Manish Jaradi using TradingView

Any break below 1710-1740 could expose downside risk against the 200-day moving average (now at around 1560). On the upside, for the upside pressure to ease, ETH/USD needs to break above the May 6, 2019 high.

Note: In the color-coded candlestick charts above, blue candles represent a bullish phase. Red candles represent a bearish phase. Gray candles act as consolidation phases (within a bullish or a bearish phase), but sometimes they tend to form at the end of a trend. Note: candle colors are not predictive – they just tell you what the current trend is. In fact, the color of the light can change in the next beam. False patterns can occur around the 200-period moving average, or around a support/resistance and/or in a sideways/choppy market. The author does not guarantee the accuracy of the information. Past performance is not an indication of future performance. Users of the information do so at their own risk.

— Posted by Manish Jaradi, Strategist for DailyFX.com

— Contact and follow Jaradi on Twitter: @JaradiManish