Bitcoin and Ethereum Analysis: 03–08–21
First week of August
Bitcoin
Current price: $39,205
The last weekly close on Bitcoin closed as a swing failure pattern at a key high of the range. This is very much expected as it just had 10 straight green daily candles which is a very rare occurrence in Bitcoin’s history. Basing on the weekly timeframe, a pullback scenario would ideally be towards the midrange at around 35,000 which coincides with last week’s open as well as the quarterly open. A bounce at the midrange is also supported by the 3D and 2D timeframe where $36,000 is clearly a previous resistance which has been broken through violently. So we could expect with greater conviction that that is a key level to be watching for a bounce.
At the moment, however, Bitcoin still has not broken the key swing low at $39,330 which was the stop hunt that fueled the 10% move to break past the range and touch $42,450. The plan is simple — if Bitcoin breaks that swing low, then a break of market structure is confirmed and we could then expect with high probability that a pullback will occur. Until then, we remain patient and must keep an open mind towards the scenario that price might be able to move higher from this point.
For long setups, we want to see price being accepted above the range high ($40,840) and break above last week’s high with conviction. If present, targets would be around the CME gap at $44,500-$48,000.
For short setups, there can be two scenarios. First scenario would be that we consolidate in this range for a little bit before making a lower high and even better if a swing failure pattern forms at the range high. Otherwise, if we break down from this point, $38,350 is a key area to watch for a S/R flip setup.
Key levels:
- Prior swing low : $38,330
- Range high: $40,840
- Last week’s high: $42,450
- CME gap: $44,500-$48,000
Ethereum
Current price: $2,613
Ethereum is definitely very bullish at the moment. Some reasons for this could be the NFT CryptoPunk craze, anticipation of EIP-1559, as well as the ETH/BTC pair bouncing from a key weekly support and breaking out of a descending triangle.
We’ve had 13 straight daily candles right now which calls for a pullback. However, the rally has been a relatively constant and healthy trend so do not be surprised if Ethereum continues its rally. It is currently at a key resistance at $2,640 and has been rejected twice as of now. Higher timeframes (daily and above) remain extremely bullish, but we are beginning to see signs of it potentially slowing down. Yesterday and today’s daily candle created a swing failure pattern taking out the $2,640 level both times. We are also seeing clear rejections from the level on the lower timeframes as well as potentially a head and shoulders pattern. Another argument for the case of a pullback is the “buy the rally, sell the news” event when the EIP-1559 is announced on the 4th of August, 2021. Finally, the ETH/BTC pair is approaching resistance at 0.069 BTC. Therefore there is a good case to be made for a pullback from this point.
For long setups, we want to see acceptance above $2,640 as well as bullish market structure on lower timeframes possibly taking out the swing high at $2,695. Targets would be the range highs at around $2850-$2910.
For short setups, we want to see the swing low at $2,507 being taken out for potentially a S/R flip setup of a deeper pullback setup. If Ethereum does pull back, we should watch the mid range at $2,320 as well as the previous resistance at $2,410. This area would be an ideal place to add positions.
Key levels:
- Key resistance: $2,640
- Prior swing low: $2,507
- Mid range: $2,319-$2,405
- Range high: $2,847-$2,910
