January 29, 2023

High Time Frame Weakness - Technical Brief June 1, 2022

This week, Cred and DonAlt, regular contributors to the Technical Roundup, are discussing a breakdown of support in BTC/USD, mixed closing of the week at support in ETH/USD and weakness in the pair against BTC. The review ends with the author's commentary on the rebound of the S&P500 to technical resistance.


Bitcoin: High Time Frame Weakness

Bitcoin/dollar still showing weaknesson higher timeframes. The market is still trading below the lower boundary ($35-37 thousand) of the range on the monthly chart. Closing the month below it almost certainly means a breakdown of this support.

The weekly chart, despite the growth, is not yetrestored the lost support of $32-34 thousand. At the moment, it serves as resistance. And until the opposite is confirmed, this breakout on the higher timeframe should be taken seriously. Breakouts are signs of weakness.

Considering how long the market has been trading in thisrange, the thesis invalidation condition is also quite obvious. We are not asking for much, just some signs of a failed breakout and recovery back into the range that would signal the prospect of a meaningful rally.

Explicit weekly close above $32K-34Kwould be the first sign of strength on the higher timeframe. And more conservative participants can wait for the closing of the month above $35-37 thousand. That, in general, is all.

For obvious reasons, we are not inclined to specialoptimism while the market is trading below high time frame support, but like last summer, we will not hesitate to change tone once there is solid evidence of a recovery.

As before, our targets for the downside scenario are around $20K and $14K if the current breakdown continues and the decline accelerates.

Ethereum: dubious bottom

The ETH/USD rate seems to be stuck to $2000. The week closed in the support area at $1800-1900.

This is not bad (at least the support is not broken), but it would be more convincing to close above its upper border, i.e. above $1900.

Anyway, there are three things to note.

First, if the market starts to rise from thissupport, then there will be quite a lot of space until the next serious resistance closer to $2,500. On the daily chart (not shown), the price has recovered back to its recent range, and this could be a good signal for direction already on the weekly timeframe.

Second, wicks towards $1700 on the high timeframeunlikely to form a long-term bottom. It is quite rare to see a long-standing level with evenly distributed participation mark a really significant low.

Finally, ETH to BTC still looks weak. Market structure is broken by this smaller low. Technical support is at ₿0.055, but a much better level is lower at ₿0.04.

All in all, ETH/USD has held (seemingly) support on the weekly chart, the daily chart suggests range recovery (a good sign), and the BTC chart looks rather weak.

Maybe the market can hold on to thislevel. The pair against USD looks good. On the other hand, BTC/USD has risen to resistance without restoring the previous range, and stocks are also at resistance. When the market as a whole is weak and the signals are inconsistent, we prefer to wait for clearer evidence of a reversal.

Boring, yes, but it has kept us from premature trades more than once.

S&P500 bounces back to resistance

The S&P500 returned to resistance.

So far, this chart has been a pleasure in terms of market structure, so the ongoing retest of the $4160-4200 resistance should be taken seriously.

It's already getting a little tedious, butthe recent trend has not been very good. In the recent past, the crypto market has followed equity indices both up and down. Hence all these jokes about BTC500.

But lately, the crypto market has been followingrisky indices when declining, but not growing. This may indicate the weakness of the crypto market. That is, if cryptocurrencies declined when stocks bounced, then what will happen to the crypto market if stocks continue to fall? This logic suggests a further decline.

There are also two confusing factors.

Firstly, not enough time has passed to meaningfully state the decoupling in the direction of growth between the crypto market and risky assets.

Secondly, this current rise in crypto assets came over the weekend, including non-working Monday in the United States.

In our opinion, it is logical to assume that ifstocks will sell off from this technical level, then, apparently, the crypto market will fall along with them. And it is rather unlikely that it will now break this correlation and rise against the backdrop of lower stocks.

In general, buying BTC/USD this week - with a retest of weekly resistance in both BTC and stocks - seems relatively unattractive to us.

Maybe next week we will get the expected recovery in both cryptocurrencies and the S&P500, but we will beat the bullish drums only when and if this happens, not before.

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.