Bitcoin, Ethereum, cryptocurrency, BTC / USD, ETH / USD – Discussion points:
- The long-term outlook for Bitcoin and Ethereum remains skewed to the upside.
- However, both cryptocurrencies may be at risk of retreat in the short term, as their respective highest peaks appear relatively stretched.
As mentioned in previous reports, the provision of extraordinary fiscal and monetary stimulus measures in response to the new coronavirus pandemic it has been sustaining Bitcoin and Ethereum prices since the nadir of March 2020.
While the long-term prospects for both cryptocurrencies remain overly optimistic, their recent surface spikes seem somewhat extended. This suggests that a short-term setback may be at hand. Here are the main technical levels to watch for BTC and ETH in the coming weeks.
Bitcoin weekly chart (BTC) – 300% Fibonacci coverage potential
Bitcoin weekly chart created using Tradingview
Bitcoin has risen more than 83% in the past 3 weeks after surpassing the psychologically imposing $ 30,000 mark, with prices now testing key resistance at the 300% Fibonacci expansion level (35352).
However, with the RSI approaching its highest weekly overbought readings since 2013, and prices tracking substantially above the 8-week exponential moving average (23110), a lower correction seems likely in the short term.
Failure to secure a firm position above $ 35,000 would likely allow sellers to direct prices back to psychological support at $ 30,000, with a break below opening a path to test the old resistance turned into support in the symmetric triangle’s implicit measured movement (28108).
Alternatively, a convincing push above 300% Fibonacci could bring the $ 40,000 mark into the crosshairs.
Bitcoin (BTC) Daily Chart – Shooting Star Hints at short term pullback
Bitcoin daily chart created using Tradingview
Approaching the daily time horizon also suggests the possibility of a short-term setback for popular cryptocurrency, as a bearish Shooting Star candlestick begins to take shape just before the 200% Fibonacci expansion (35114).
A $ 30,000 reversal to psychological support seems likely if buyers fail to overcome Fibonacci resistance. The clearing would likely propel Bitcoin back to support at the December 27 high (28,244).
On the other hand, a daily close above $ 35,000 could drive prices up to 227.2% Fibonacci (36,913).
Ethereum (ETH) Weekly Chart – Eyeing Key Resistance at $ 1000
Ethereum weekly chart created using Tradingview
Ethereum has also risen in the past 3 weeks, rising more than 65% to test key resistance at the February 2018 high (979).
However, with the RSI rising to its most overbought readings since 2018, the second most traded cryptocurrency may be at risk of a lower reversal in the short term.
Failing to clear the $ 1000 mark could generate a negative boost towards the May 2018 high (838), with a break below bringing the $ 700 level into focus.
On the other hand, breaking psychological resistance could neutralize short-term selling pressure and pave the way for the price to defy the record high (1424) set in January 2018.
Ethereum (ETH) Daily Chart – Fibonacci 200% coming into focus
Ethereum daily chart created using Tradingview
The daily schedule, however, suggests higher for Ethereum in the short term, with buyers driving prices through a flood of key resistance levels at 161.8% Fibonacci (956.27) and February 2018 (979) .
That said, the recent upward pressure appears to be overextended, given the distance price is traveling from the 8-day EMA (781.45) and the extreme overbought readings seen in the RSI.
Therefore, an aggressive retracement towards the May 2018 high (838) may be imminent if the price does not close above the psychological resistance at $ 1000 at the daily close.
The compensation that probably precipitates a challenge from the former resistance turned into support at the December high (757.67).
On the contrary, a daily close above $ 1,000 could open the door for buyers to start probing the 200% Fibonacci expansion level (1108.76).
– Written by Daniel Moss, DailyFX Analyst
follow me on twitter @DanielGMoss
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