May 15, 2021

Technical Overview | May 5, 2021

This week Cred and DonAlt, mailing list authors Technical Roundupdiscussing the lateral movement of the bitcoin rate to dollar amid a strong rally in ETH.Altcoins today in the program are Litecoin / BTC and Solana / BTC, as well as a couple of breakouts to the dollar - Binance Coin / USD and THORChain / USD. In addition, the authors share a link to an interesting thread that unites the stock and crypto asset markets into a coherent macro picture.

The idea behind this weekly roundup is simple: you get charts for the most important digital assets in one place, at the same time, every week.

Are you a short term trader looking tocheck your vision of the trend and the levels that are important from the point of view of market structure, or as a cautious investor trying to understand this new asset class, we hope that you will find something useful in these reviews.

There will be no signals here, it's pretty obvious. But we can offer something better: logical structure, consistent method and reliable analysis.

We're not perfect. We make mistakes.And when we make a mistake, you will know for sure about it, because we will discuss our mistakes here. If the situation in the markets from the point of view of TA seems vague or not of interest, we will not suck from the finger an analysis that we ourselves would not consider convincing. And although we cannot promise perfection, we will try to be as honest and transparent as possible.

Bitcoin continues to move sideways

Chart executed in TradingView

Chart executed in TradingView

The bitcoin rate against the dollar continues to move in a range, failing to close on higher timeframes above several important resistances around $ 60,000.

The exact levels are not that important here, especially against the backdrop of the Ethereum surge against the dollar, which has raised the price of ETH by almost 40% from the upper border of the range.

The total yield of bitcoin against the dollar in April was -1.7%, while in ETH / USD it reached + 45%.

The BTC price will reach the decision point, orsetting a higher maximum above $ 60 thousand, or rolling back to support in the region of $ 40 thousand. Otherwise, one can only state the continuation of tiresome consolidation.

To summarize, BTC / USD currently looks likerather uninteresting, especially against the background of such a strong lead from Ethereum. The points of interest for bitcoin are somehow located at the borders of this weekly range - they are either stopping at the borders or closing outside them on higher timeframes. Thus, the most expedient strategy at this stage, in our opinion, is still defensive.

Ethereum continues to drag the crypto market with it

Chart executed in TradingView

Chart executed in TradingView

Ethereum continues to lead the market these days.

Paired to the dollar, ETH sets newpeaks at an ever-increasing rate. There are no longer any technical resistance levels, except for round numbers and those determined by tools like Fibonacci expansion, pivot points, etc.

Under these circumstances, there are three waysidentify areas to manage your exposure to the market. The first is to use the aforementioned technical analysis tools (extensions, pivot points / levels, etc.). The second is to wait for the formation of new levels and ranges, and then wait, for example, for the loss of support and turn to resistance. Finally, you can try to navigate the ETH to BTC rate, which is our preferred method.

Paired to Bitcoin, ETH Reaches Firstresistance at the level of ₿0.055. While the conservative option of partial profit-taking in this area seems quite reasonable, one must also bear in mind the context of this movement, namely the breakout of the multi-year exchange rate range. As a result, we continue to give preference to buying at support over selling at resistance. More technically speaking, if the week closes above ₿0.055, then the rate is likely to move to the opposite border of the range, ₿0.084.

To summarize, we can say that Ethereumlooks strong. It has now reached the first significant resistance level (applicable to both pairs) at ₿0.055. A weekly close above this level will be a strong signal of a likely continuation of the trend.

Litecoin is confidently continuing its momentum

Chart executed in TradingView

The list of altcoins grabbing buying interest from the bitcoin market is quite long, and Litecoin is at the top of this list.

After breaking through the resistance at the level of ₿0.0037, LTC continued to rise against BTC, restoring old levels in the process.

The current weekly candlestick has reached an important level in₿0.0056. A close above it would signal a range breakout as well as an obvious larger high on the weekly timeframe. In this case, ₿0.0074 can be considered as the next target level.

If you bet on the continuation of the impulse inaltcoins, then Litecoin is a good exposure option in this direction. ₿0.0056 is one of the most important levels on the chart, so a manifestation of strength in this area is likely to result in a powerful and breathtaking upward momentum.

To reiterate: when the altcoin rate against the dollar enters new territories, an analysis of its rate against BTC or even ETH can provide very valuable context.

Solana withholds support

Chart executed in TradingView

Altcoins have had a hard time keeping up with Ether this week, but the SOL / BTC rate has held a key support level.

After that, a retest of ₿0.000754 could be expected, and this happened.

The current bounce has formed a new cluster, or a larger low, in the area of ​​₿0.00078–0.00082.

As long as this structure persists, we expect the trend to continue to new highs in SOL / BTC. The invalidation of the thesis will be a breakdown of the lower border of the range at the level of ₿0.000754.

It might seem like we're focusing on hererather arbitrary levels, but we do not always have the privilege of working with a well-formed technical structure in a market that has grown so much in a short period of time. In such circumstances, one has to rely on what is, that is, on a less mature market structure.

Breakout of the week # 1: Binance Coin

Chart executed in TradingView

The Binance Coin rate to the dollar broke through the upper border of the daily range at $ 600.

We regard this breakout as bullish, especially in the context of the multi-week range trading that preceded it.

Any close below $ 600 on the higher timeframe invalidates this thesis.

There is a lot of asymmetry when trading onbased on similar structures in an uptrend. At the same time, the conditions for canceling the thesis are extremely clear and no technical resistance levels above are visible. This provides a clear basis for quickly closing losing positions and more confidence in holding profitable ones.

Breakout of the week # 2: THORChain

Chart executed in TradingView

The RUNE / USD rate is testing the breakout level above the previous high of $ 16.60.

Our analysis here is similar to BNB / USD, i.e. the breakout is presumably bullish, with thesis invalidating if it closes below the breakout level on the high timeframe.

Traders often take positions in the middlerange or in less attractive conditions in the hopes of catching momentum. In itself, this may look good, but you need to remember about the very real opportunity costs associated with holding a position for an indefinite period of time in anticipation of momentum.

On the contrary, when opening a position on a breakout (byat least if it works well) the price moves quickly and gives a quick confirmation or invalidation of the thesis. That's why we've included a couple of breakouts in this summary.

Got attention: drawdown in the traditional macro market

The S&P 500 and technology stocks are trading in the red at the time of writing.

There are several catalysts for the decline, according to a Bloomberg article

Geopolitical tensions between China andTaiwan, the loss of momentum in the stock market following earnings reports, Secretary Yellen's rate warning, etc. are all listed as potential catalysts for the latest decline.

On that note, @OCPCapital posted a great Twitter thread yesterday,

in which they discuss the dynamics of riskassets, the increased correlation of the crypto market with the macro movements of the US dollar, the upcoming catalysts in Ethereum, the dominance of Bitcoin and a potential trading idea based on this whole picture.

Nice week to zoom out and try to look at the markets more holistically.

The article does not contain investment recommendations,all the opinions expressed express exclusively the personal opinions of the author and the respondents. Any activity related to investing and trading in the markets carries risks. Make your own decisions responsibly and independently.