Crypto markets climb without a safety net

July 7, 2022 - 1 month ago

As the global markets continue to display whipsaw prices action like a runaway roller coaster, while the crypto markets hold steady as investors comb throw the minutes from the U.S. Federal Reserve’s most recent interest rate policy meeting as they look for clues about what the U.S. central bank may do next to tackle rising inflation.

The Fed’s minutes offered no major surprises for the global markets as investors will now focus on what the U.S. Federal Open Market Committee will say in July’s meeting.

Meanwhile, the minutes from the Fed’s two-day meeting last month show that the central bank’s policymakers concluded higher interest rates could be needed to restrain what they saw as a worrying trend.

The policymakers also acknowledged that more rate hikes could weaken the economy.

Having once again levelled off around US$20,000.00, Bitcoin, the world’s largest cryptocurrency by market value, remains vulnerable (to the bearish case) as it continues to hover above the potential base (bottom) at US$19,000.00 without a safety net (meaning, little support is assessed if breach till US$16.000.00 to US$12,400.00).

Meanwhile, its counterpart Ethereum, the coin linked to the Ethereum blockchain network, is changing hands from around US$1,000 to US$1,150-60.

Based solely on technical analysis, Bitcoin (and other coins) remain vulnerable since initiating a potential ‘bottom’ from the heavily contested area of US$19,000.00, while Ethereum’s major support level remains at US$936.00.

Based on the daily technical timeframe for Bitcoin, the posted inverted Japanese Hammer candlestick is intact for the moment.

Traders often rely on Japanese candlestick charts to observe the price action of financial assets.

Candlesticks chart characteristics can also signal early reversal signals.

The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential reversal upward.

It is important to note that the Inverted pattern is a warning of potential price change, not a signal, in and of itself, to buy.

Meanwhile, the Relative Strength Index (RSI) 3-period pattern remains buckled since Tuesday; however, it remains above the 50-midway point, positive bias.

The Moving Average Convergence Divergence (MACD) oscillator supports a positive bias, while the ADX (trend) indicator supports a ranging market (no trend).

In my assessment, as long as Bitcoin holds above the key support area at US$19,000.00, it supports a potential bottom (from here); therefore, it expects further growth or demand/strength to increase.

Viewing the topside, although there are many hurdles to clear to support any bullish call, a US$23,500.00 break would reveal the region of US$28.600.00. Reassess from there.

Conversely, if the recent price action is viewed as another ‘dead cat bounce’, this could be interpreted as a bearish return.

A New York close beneath US$19,000.00 would be devastating for the bulls as it may trigger a ‘Domino Effect’ for other crypto markets.

Based on the downward trajectory, it envisages a measured move around US$16.000.00 to US$12,400.00. Reassess from there.

Daily Chart of Bitcoin

As the quote goes, the “$64,000 question is”, can the world’s second-largest cryptocurrency, Ethereum, prices uphold above the level at US$936.00 without a safety net?

As we now witness, the market bulls need to clear and settle above the US$1,150-60 level (New Close close) to open up the path to a stronger bullish case.

Based on the technical assessment, the Relative Strength Index (RSI) 3-weekly ‘lookback’ indicator is positive, while the Moving Average Convergence Divergence (MACD) oscillator supports a positive signal, and the ADX (trend) indicator supports a ranging market (no trend).

Without a daily close beneath US$936.00, this support level could save the bulls from a devastating fall to a measured downward trajectory of US$620.00. Reassess from there.

Conversely, as the market bulls wear down, the US$1,150-60 resistance, if cleared (on a New York close), could potentially put the trend back into positive territory and support the broader call to the US$1,250 to US$1,450-60. Reassess from there to the broader call.

Daily Chart of Ethereum

Another day passes, and Binance, the cryptocurrency issued by the Binance exchange, puts in another ‘song and dance’ to a potential positive case as the market edges higher.

Based on the technical pattern, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator supports a positive bias; however, it remains buckled.

The Moving Average Convergence Divergence (MACD) oscillator remains married to the RSI positive signal, and the ADX (trend) indicator supports a ranging market.

Viewing the topside (resistance), cleared at US$232-33, now opens up the path towards US$245.00. Reassess from there.

While the market continues to sustain above the US$US$196.00 to US$200.00, a key level with no safety net should eventually see an improvement towards the bullish case, with the immediate support located at US$215.00 to US$220.00.

Daily Chart of Binance

Another slow, drawn-out session for Cardano (ADA/USD) on Wednesday, as the market prices continue to coast above the major support at US$0.42.

Based on the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has reinstated a positive bias, while at the same time, the Moving Average Convergence Divergence (MACD) supports a weak positive bias, and the ADX (trend) indicator supports a ranging market.

While the US$0.42 support is intact, overall, it should keep the market bulls in play for the grand challenge of the hurdle at US$0.62/US$0.63, which, if cleared, opens the path further towards the region of US$0.72 to US$0.77.

Conversely, a decisive break of US$0.42 would be devastating for the bulls, as this could open the decline further into uncharted waters and give a measured move from a US$0.42 break to US$0.30-US0.33.

Daily Chart of Cardano