- Massive sell-off met by sharp reversal days; prior swoons met by buying
- But if buyers don’t come in and we soon see a failure, change in character in progress
- Bitcoin, Ethereum, and Ripple charts with price levels and lines
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In yesterday’s cryptocurrency technical outlook, we expressed the notion that the charts may be broken and that the ‘animal spirits’ of the manic rise may have finally broken. But even if so, as we also stated there will be huge bounces along the way.
Yesterday, we saw massive turnarounds across the spectrum after support levels were either exceeded or met. The turnabouts forged key-reversal bars, which could amount to a continuation higher. But we’ll want to take note of how this plays out, because past swoons have been greeted with big reversals which turned into new bull legs higher. And if rallies falter this time around, then a significant change in character could be on display…
Bitcoin failed to hold the May slope prior to yesterday’s break, then traded below the July trend-line before putting in a bullish key-reversal bar. Just ahead lies resistance in the vicinity of 12100/600, an area which could put the brakes on any recovery. If it fails and takes out the spike-day low of 9222, then look for more carnage to set in.
Traders are buying the dip in Bitcoin, check out what this might mean on the IG Client Sentiment page.
Chart 1 – BTC/USD: Daily
Ethereum broke below the 862 swing-high posted in December, doing as the others did – put in a key-reversal bar. The sharp break in December was greeted quickly by buyers, but will the same happen this time around? If not, then a drop below yesterday’s reversal-bar at 770 will quickly have the November trend-line in focus, and worse.
Chart 2 – ETH/USD: Daily
Ripple has been the wildest cryptos of the bunch recently as the new kid on the block. It’s meteoric rise during December and January was met with a 74% plunge off the monthly high to the double-bottom set during the prior two sessions. Support looks to be significant right around $0.87. There is resistance not far ahead around the $1.56-mark. Overall, though, this one currently sits further down on the watch list for now.
Chart 3 – XRP/USD: Daily
Whether you’re a new or experienced cryptocurrency trader, we have several resources to help you;Introduction to bitcoin trading guide, indicator for tracking trader sentiment, and a weekly webinar discussing the latest developments.
---Written by Paul Robinson, Market Analyst
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