December 4, 2021

Either Up or Down - Technical Review November 24, 2021

Cred and DonAlt, authors of the Technical Roundup, discuss a somewhat unreliable retest of the highs of the previous range in BTC / USD and relative strength in ETH, as well as the likely outlook for the altcoin market in general and Solana with Avalanche in particular.

BTC: Ambiguous Close Within Weekly Structure

Chart executed in TradingView

Chart executed in TradingView

Bitcoin / dollar at the most important retest of the weekly structure at $ 55.8-60 thousand suggested a rather ambiguous closing of the weekly candle.

One of the options for orientation in this situationIs to consider the specified weekly structure as a range. The lower limit ($ 55.8k) is the minimum of the range, the upper limit ($ 60k) is the maximum. The previous week closed between these levels. In our understanding, such a close looks neutral at best, and this is not the reaction that we would prefer to see at this defining level.

Developing the logic of the range, price recoveryabove its upper border ($ 60K) could be a good signal of a “bullish” continuation. A close below the low of the range ($ 55.8k) could signal a decline towards $ 50k.

In general, for us, this is a rather inconvenient closing, inas a result of which we, in fact, are forced to write something like "either grows or falls", without having a more intelligible signal in our coordinate system. If you take a conservative approach, then there is some reason to reduce risks until the market recovers above the upper boundary ($ 60,000) of the current cluster. Moreover, it is not so far away.

What else can be noted is that on the marketin futures contracts - in particular, at the level of open interest - this decline was not strongly reflected. In fact, open interest remained relatively flat despite even smaller lows. Regardless of how you interpret this divergence in the short term, it would be nice to see a significant increase in open interest at weekly support. But alas, there is nothing here either.

In summary, at best for BTC / USD we canto state trading in the range of $ 55.8-60 thousand. Closing through any of its boundaries is likely to set a trend for the mid-term. And one of the most favorable scenarios, we see the continuation of the inconvenient consolidation in BTC / USD, accompanied by a holiday on the altcoin market - with fireworks and crackers. This can hardly last long, but the opportunities arising in such conditions can be extremely attractive (and certainly much better than the alternative scenario in the form of a fall in bitcoin, dragging the entire crypto market with it).

Ethereum looks stronger

Chart executed in TradingView

Chart executed in TradingView

ETH price chart looks stronger than BTC.In the pair against the dollar, ETH closed above the defining level of $ 4,000 (similar to what bitcoin did not hold), and ETH / BTC is moving towards the upper end of its multi-month range.

Last week we pointed out that the daytimethe trend is broken and that most likely it will lead the market to the $ 4000 area. Now that the $ 4000 level has been held, all that remains to continue the holiday is to restore the daily trend. In our understanding, this is best defined by the $ 4480–4610 cluster (today's resistance).

If the price recovers above it on the dailytimeframe, this will technically be a successful bounce off the defining weekly level and signal a continuation of the uptrend. An almost perfect bullish setup.

Until a certain point.

Few will say it out loud, but historically, significant strengths in Ethereum and altcoins, while Bitcoin is on the verge of a collapse, have been the harbingers of the top of the cycle.

May is a great example of this:Bitcoin had already formed a top by that time, ETH had doubled, altcoins were rocketing, but it all stopped immediately as soon as Bitcoin collapsed, and in most cases the fall of the “alts” was much stronger than BTC / USD.

In other words, periods of strength in altcoins against the backgroundweak BTC often have a significant price, and it consists in the fact that ultimately the entire market will "drown in blood" (unless, of course, Bitcoin / dollar returns to growth).

Nevertheless, two arguments make sense to us.Firstly, if BTC / USD demonstrates strength and confident consolidation, slightly receding from the edge of the abyss, then the thesis about the top of the cycle will be much less convincing. Secondly, if BTC / USD continues to move on the edge, this usually gives enough time and space to take advantage of some opportunities in altcoins and have time to lock in profits before Bitcoin brings the market back to reality.

Solana over defining support

Chart executed in TradingView

Chart executed in TradingView

The most compelling narrative in the altcoin market is “L1 season”, embodied among others by Solana and Avalanche. (L1 is Layer 1 protocols, from the English Layer 1.)

As mentioned above, the most favorablethe background for altcoins would be the consolidation of BTC / USD in a narrow weekly range of $ 55.8-60 thousand. Ethereum, apparently, will continue to show the best dynamics of growth until the bitcoin / dollar accelerates downward, and strong Ethereum, in in turn favors other L1 altcoins.

$ 190 in SOL / USD has somedaily structure, which can be used as a defining one for the medium term. The reason we do not pay attention to the lower timeframes is that if altcoins start flying up like fireworks, then the probability of any noticeable retracement on a high timeframe is rather small, no matter what happens on the lower timeframes.

Most likely, you will have to dig into youra set of tools for determining trend continuation setups, and this, perhaps, goes beyond the scope of these weekly reviews (although in fact everything is about the same, only the timeframes are different).

However, in case the altcoinsIf there is a sell-off triggered by the downward volatility in BTC / USD (or some other less obvious catalyst), we would like to zoom out and provide some context.

A weekly cluster is visible in SOL / USD,which is likely to be the determining factor for the trend on higher timeframes. The upper border of the cluster is $ 174, the lower one is $ 136. As long as price respects this range, the trend remains bullish. As usual, the area of ​​the lower border of the cluster may offer a better risk-reward ratio, while the upper border of the cluster is a faster trigger for the trend continuation. And one last thing: when the market falls, this cluster may also make sense to pay attention to with one additional caveat: the price will most likely go right through it before rebounding, so maybe it makes sense to look for possible "liquidation sales" it will be convenient.

Avalanche: no local declines on higher timeframes

Chart executed in TradingView

AVAX has shown impressive growth lately, even in the days of general weakness in the crypto market, holding on with dignity.

There is also a simple explanation for this, sinceAvalanche has managed to become the big L1 bet for the hedge fund Three Arrows Capital, which is keen to keep up with rival Multicoin Capital. In our opinion, this is a positive factor.

Last time we wrote about AVAX / USD when it tested the ~ $ 40 breakout level. None of us fools and losers took full advantage of that setup.

Our thesis here is similar to Solana / USD.

Namely, with a favorable background for altcoinshigh timeframes are likely to be useless. The momentum / trend continuation is the only bet in the market that does not provide any significant pullbacks on timeframes older than 4h.

In the event of a fall in the crypto market as a whole inAvalanche / USD also has a similar area of ​​finally-noticeable-retracement. We regard this as the breakout level on the weekly chart (~ $ 70). As in Solana / USD, wicks below this level (into the $ 60 area) are likely in liquidations amid descending volatility, but this is the closest structure that we can identify as a contender for a trend-confirming retest on higher timeframes.

To summarize, a "haircut" in BTC / USD is between $ 55k.and $ 60k = good for altos = Ethereum, Solana and Avalanche are likely to skyrocket without any retests on higher timeframes. BTC / USD drop below $ 55k = bad for alts = good chance to buy on big liquidations in markets that have moved exclusively up in recent weeks or months.

BitNews disclaim responsibility for anyinvestment recommendations that may be contained in this article. All the opinions expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading on crypto markets involve the risk of losing the invested funds. Based on the data provided, you make investment decisions in a balanced, responsible manner and at your own risk.

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