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Bitcoin & Ethereum: cracks in the rally

The upward pressure in Bitcoin and Ethereum has eased somewhat; so far the recent retreat appears to be a consolidation within the broader uptrend and what are the key levels to watch?

Source: Bloomberg

The fall in Bitcoin and Ethereum below the last month’s low suggests that cracks have emerged in the multi-week rally.

So far, cryptocurrencies have been holding above key support levels, but unless upward momentum to picks up the downside risks are unlikely to dissipate.

BTC/USD monthly chart

Source: TradingView

Bitcoin: Consolidation within the uptrend

The broader trend in BTC/USD remains bullish, notwithstanding the recent consolidation, as the colour-coded candlestick charts based on trending/momentum indicators show.

BTC/USD daily chart*

Source: TradingView

Importantly, Bitcoin has been holding above a crucial cushion around 25300-26000 (including the 89-day moving average and the February 2023 high).

BTC/USD daily chart

Source: TradingView

To be fair, the hold above the support recently is not a guarantee that the retreat is over. Unless the psychological 30000 is crossed decisively, the retest of the 25300-26000 area can’t be ruled out.

ETH/USD daily chart*

Source: TradingView

Ethereum: early-May high is tough bar to cross

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

Any break below 1710-1740 could expose downside risks toward the 200-day moving average (now at about 1560). On the upside, for the upward pressure to fade, ETH/USD needs to break above the May 6 high of 2019.

ETH/USD daily chart

Source: TradingView

*Note: In the above colour-coded candlestick charts, blue candles represent a Bullish phase. Red candles represent a Bearish phase. Grey candles serve 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 merely state what the current trend is. Indeed, the candle color can change in the next bar. False patterns can occur around the 200-period moving average, or around a support/resistance and/or in sideways/choppy market. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Users of the information do so at their own risk.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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