Clean (Mostly) Sky for Btc and Eth - Technical Review of November 5, 2021

Slow but steady breakthroughs in BTC and ETH, as well as the author's view of altcoins in general at this stage of the market, are in the new issue of the regular review from Cred and DonAlt, the authors of the Technical Roundup mailing list.

Clear (Mostly) Skies for Bitcoin

The chart is executed in TradingView

The chart is executed in TradingView

The exchange rate of bitcoin to the dollar since the last issue, in fact, has not budged. The market tested and closed above the important weekly support of ~$58 thousand. From TA's point of view, the picture remains "bullish".

As for the potential target levels for continued growth, our assumptions in this regard can hardly be anything better and more valuable than yours. There is a reason to use round values ($70 thousand, $80 thousand, etc.) as preliminary benchmarks, or you may prefer to react according to circumstances to data from futures markets. Another option is to simply wait until the price forms a certain structure (even if intraday), and use it as a reference point for setting a trailing stop, thus bypassing the need to determine target levels.

In short, we note that the S&P 500 is steadily forming new highs, so the probability of correlated weakness as a result of a fall in traditional markets is decreasing.

Although the lack of clear momentum is worrying for some participants, from the TA point of view it is difficult to formulate a convincing "bearish" thesis over support and at record highs. We will change our mind when and if circumstances change.

As we wrote earlier, even in the "worst-case" scenario, if this breakthrough does not hold, from our point of view, it would be reasonable to look at the buying opportunities in the area of the likely formation of a larger minimum at $ 50 thousand.

The only potential deterrent factor that should be kept in mind again today is a very aggressive positioning in altcoin futures. In this part of the market, the share of borrowed capital in the "open interest" is still very high. Although our ideal scenario is a growth impulse in BTC/USD, provoking altcoin sales, this relationship has not always worked. For example, bitcoin looked strong against the dollar at the first breakout of $50 thousand in early September, but this movement was blocked by the collapse in the altcoin market (pulling the rest of the market).

In summary, BTC/USD still looks good. The market is trading above the support, there is no "technical" resistance. If it stops looking good, then the $50k area could potentially provide additional opportunities for betting on the continuation of the trend. The loss of this level will mean a violation of the uptrend.

Ethereum Updates Record Highs

The chart is executed in TradingView

The chart is executed in TradingView

Ethereum/dollar joined the race and updated record highs.

The market chatted for a few days above the level of the previous maximum of $ 4000, but now this area seems to have worked as support before continuing growth.

As for the target levels, the available tools here are essentially the same as for BTC/USD. We are not yet mentally ripe for the Fibonacci extension. It may also be useful to pay attention to the ETH/BTC chart. Reducing the risk of Ethereum at key resistance levels in ETH/BTC can be useful in conditions when ETH has "technically" no resistance levels left in a pair against the dollar.

At the time of writing, the market is already ~14% above the breakout level ($3,900) on the weekly chart. The further the price moves away from this level, the less acceptable its retest becomes.

In other words, a clear setup is either an unsuccessful breakthrough that stays close to the breakthrough level (you work out a rollback and a potential larger minimum, you turn down the position when refuting the thesis), or a breakthrough that simply does not return to this level. A certain average option — a strong breakthrough with a return for a retest relatively soon - looks much less attractive in our eyes.

Summing up, Ethereum looks good for today too. Not a surprising conclusion, given the update of record highs. If the growth continues, the retest of $4000 in the near future seems very undesirable.

Altcoins: High Prices, Vague Narratives

Given the movement in the main cryptocurrencies, we are looking at "altos" at this stage of the market at best without enthusiasm. We expect that volatility in BTC and ETH will create a kind of liquidity vacuum in the altcoin market, at least in the short term.

Long on altcoins = short on volatility in BTC/USD (and ETH/USD), as we have said more than once here. Therefore, positioning in altcoins based on growth, when the market flagships update the highs, from our point of view, is not the most attractive idea in the market.

This caution is compounded by the fact that the overall positioning of the market for altcoin futures still looks very aggressive, as we wrote last week. The financing rates for perpetual swaps are high, and it is quite expensive to keep longs open. This may be acceptable when there is a clear thesis for moving up, but in this case it is not obvious to us. The higher the transaction costs, the more profitability is needed to recoup them and make a profit. Taking the financing rate for transaction costs, today we do not have a sufficiently convincing thesis that would justify positioning on altcoins.

However, there are obvious exceptions to this. Two come to mind. First— if you already have carefully analyzed and well-built long-term positions in this market, it probably makes no sense to abandon them for the sake of chasing the profitability of flagships. Secondly— there are always a few exceptions that will show impressive growth even in adverse conditions. You can either trade off these movements, or simply move the corresponding assets higher in the viewing list in order to consider them first when more favorable conditions for the altcoin market as a whole occur.

To summarize, today our attention is focused on the flagships of the crypto market. Altcoins now make sense to look at rather in order to get an idea of which of them are showing strength relative to the market as a whole. A shortlist of such assets may come in handy later.


You must be logged in to post a comment.

About Author
Recent Articles
May 23, 2024, 1:09 PM THE STARS ENTERTAIN
May 22, 2024, 3:02 PM Mohammed Nishad S
May 21, 2024, 11:06 PM Syed Haider Ali
May 21, 2024, 8:42 PM Syed Haider Ali
May 20, 2024, 9:33 PM Syed Haider Ali
May 20, 2024, 8:15 PM Nasir Ali Shah