Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Bitcoin and Ethereum technical outlook: upside capped

Bitcoin may not be out of the woods yet; Ethereum is holding above key support and what is the outlook and what are the key levels to watch?

Source: Bloomberg

Bitcoin medium-term technical outlook – bearish

The recent pause in Bitcoin’s slide around key support raises the perception that it could be building a base. However, it may be too soon to conclude that the worst is over. Indeed, the overall downward bias remains intact, and any rebound could be short-lived.

For the past few months, BTC/USD has been holding around quite-strong support at 17589 (the June low). The sideways price action in spot is reflected in the stalling of momentum on the daily and weekly charts.

BTC/USD weekly chart

Source: TradingView

On the weeklies, there is evidence of positive momentum divergence (stalling in price associated with rising momentum). However, it may be premature to read too much into this, for two reasons.

Firstly, in a sideways / directionless market, momentum may not be a reliable leading indicator. It is a description of the trend and its strength (or the lack thereof). Secondly, in the past month or so, realized volatility has fallen.

Quite a few bars on the daily candlestick charts are long-legged with small bodies, implying indecision. Wide-ranging bars depict conviction of either the bulls or bears, depending on the direction of the market. Hence, on their own, such momentum signals can be inconclusive.

BTC/USD daily chart

Source: TradingView

Big, wide-ranging candles on the daily chart coupled with a resistance break can be reliable indicators of a change in trend. In this regard, there is immediate resistance on the 89-day moving average.

More often than not, pullbacks/rebounds have come about from the average. Hence, a decisive break above it could be a sign of strength in the near term, potentially opening way towards the 200-day moving average (now at about 25950). That could be tough resistance to crack.

Ethereum medium-term technical outlook – bearish

While BTC/USD could be forming a double bottom at the June and September lows, ETH/USD is in the process of staging a higher low this month, relative to its June bottom. A higher secondary low (relative to the previous one) in ETH/USD versus a potential double bottom in BTC/USD is a reflection of the relative strength of the former cryptocurrency.

ETH/USD daily chart

However, ETH/USD remains entrenched in a downtrend, guided by a declining channel from February 2022. For now, 1193-1219 seems to offer decent support, with stronger support at the June low of 879. Unless ETH/USD is able to clear immediate resistance at the end-August low of 1421, the path of least resistance in the short term remains sideways to down. Ahead of 1193-1219, there is a tougher hurdle on the 200-day moving average (now at 1800).

Any break below 1193-1219 could pave way towards the June low, near 78.6% retracement of the 2020-2021 rise. Subsequent support is at the September 2020 high of 490.

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. 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. See full non-independent research disclaimer and quarterly summary.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.