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Bitcoin (BTC/USD), Ethereum (ETH/USD) Take on Tone of Recovery

Bitcoin (BTC/USD), Ethereum (ETH/USD) Take on Tone of Recovery

James Stanley, Senior Strategist

Bitcoin, Ethereum Talking Points:

  • Cryptocurrency markets were falling dramatically last week, but after support set on Saturday for Bitcoin and Ethereum, buyers have been pushing the trend higher.
  • Both Bitcoin and Ethereum have recent tests of longer-term support coupled with short-term higher-highs and higher-lows. But there’s a subtle but important difference between the two chart setups at the moment, highlighted below.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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The month of May was brutal in the crypto space, Bitcoin especially, as a cascade of negative headlines punctuated bearish price action, causing a number of coins to turn over and push into bearish trends. As support began to build early in June, the sell-offs appeared to slow but this didn’t mean that sellers were done yet, as another leg-lower last week threatened to take out those lows.

That did not happen and, instead, the past few days have seen both Bitcoin and Ethereum establish a support base to go along with a higher-low that may be pointing to another directional flip.

In Bitcoin, that support base is around the $30k psychological level, from which there’s a batch of other support mechanisms in-play to create an element of confluence. There’s a Fibonacci extension from the 2017-2018 pullback plotting very nearby, and the prior swing low from the month of May is at $30,666.

This zone was tested through last week, albeit briefly. Prices quickly jumped back-above and have been pushing higher-since, accented with a higher-low support test on Saturday.

Bitcoin (BTC/USD) Daily Price Chart

Bitcoin BTCUSD

Chart prepared by James Stanley; Bitcoin on Tradingview

Taking a shorter-term look and highlighting the rationale for bullish continuation potential, it was the Saturday support inflection that’s turned out to be the topside driver, with that higher-low propelling price action up to a short-term higher-high. This also helps to define the short-term trend’s structure, with support potential around the prior swing high, plotting around the $35k handle. I’ve also added a secondary support zone on the below chart, highlighted in green and derived from a couple of prior price action swings.

On the side of resistance, the level of $40,904 has now caught two highs in recent Bitcoin price action. Given the probe of the low and the hastened reaction thereafter, if this resistance level comes into play again, it may set up bullish breakout potential, particularly if bulls can keep the pace that they’ve displayed since that Saturday low.

Bitcoin (BTC/USD) Four-Hour Price Chart

Bitcoin BTCUSD Four Hour Price Chart

Chart prepared by James Stanley; Bitcoin on Tradingview

Ethereum Rallies from Fibo Support

Ethereum has tracked Bitcoin fairly well with a few exceptions. In the similarities column, Ether also pushed down to a fresh low last week, albeit temporarily. There was another threat at support on Saturday but, similar to Bitcoin, buyers came in to set a higher-low, after which bulls have continued to drive with prices setting a fresh short-term high.

In Ethereum, support has been building around a 76.4% Fibonacci retracement taken from the January 11-May 12 major move. This isn’t the first time that level has come into play, as that same price helped to mark the May low after the aggressive sell-off showed up mid-month. This level was technically tested through last week but, when it came back into play on Saturday it helped to set the higher-low.

To learn more about Fibonacci, check out DailyFX Education

Ethereum (ETH/USD) Daily Price Chart

Ethereum ETHUSD Daily Price Chart

Chart prepared by James Stanley; Ethereum on Tradingview

You may notice in the above chart, Ethereum is running into some Fibonacci resistance after this recent bounce, and this is where the two markets begin to deviate.

Given the meteoric rise in Ethereum so far in 2021, prices have continued above that January 11th swing low while the same cannot be said about Bitcoin, which actually touched that same January low during last week’s sell-off. This may provide an impediment to the bullish trend, at least for now, as the move appears to be somewhat stretched as a new level of resistance is coming back into play.

This doesn’t necessarily spell doom and gloom, as it may turn out to be a mere pause point in the move, or perhaps nothing at all; but it does make Ethereum look a touch less attractive than what was looked at earlier on Bitcoin.

ETH/USD Four-Hour Price Chart

Ethereum ETHUSD Four Hour Price Chart

Chart prepared by James Stanley; Ethereum on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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