Is the cryptocurrency market finally breaking the downtrend?

Is the cryptocurrency market finally breaking the downtrend

A significant recovery is emerging in the market. Bitcoin has reached the downtrend line, which it has been under for six weeks. Is a breakout coming up?

Decision Point

Bitcoin’s chart tells us several important things. The most important of these is that the leading cryptocurrency is steadily holding within the bullish pennant formation we have delineated. It is formed by the resistance formed by the trend line, which finds its beginning at the level of $69,000. The same counts for the support resulted from the trend line, formed from the combination of the peaks from April and September. The proximity of the former may indicate a breakout attempt. However, there is a convergence here with resistance at the price level just below the $50,000 value. This region has already provided local support and resistance, which means that it may be difficult to break through.

Noteworthy is the price behavior around the 200-day moving average (red line). We have mentioned its essence many times before. Meanwhile, we see that it has become an object of price manipulation, or more interestingly, is losing its validity. On December 17, we saw a strong decline below its value, a day later it became resistance, and the next day an attempt to break out of it ended with the formation of a candle called “falling star”. A shooting star is a candlestick form that has a small body and a much higher upper wick. It has strong bearish characteristics. On the following days, however, the candlestick broke higher. Thus, given that the 200-day moving average had already been broken earlier in the year, and the price returned above it again after a longer period of time, it can be assumed that it is losing its role.

The RSI picture is an interesting one. Here we also see an attempt to break the long-term resistance. Two consecutive bullish divergences are also present. This is quite a rare phenomenon. The first one, marked in yellow, turned into the second one, marked in pink. Such a pattern of the indicator, supported by the equally bullish MACD, is reason for optimism.

So what awaits us in the short term?

If the breakout attempt fails, we will see the price move towards the trend line supporting the pattern. Its possible breakout may result in another test of the USD 42,000 level. The positive scenario, on the other hand, should result in a breakout of the pattern and overcoming the psychological barrier of $50,000. The next resistance is located at 60,000 USD. Bitcoin reaching this region may result in a local correction and further consolidation between the mentioned values.

Ether on support

We could present the Ether analysis in two different forms. One based solely on the body of the candles, the other on their wicks. In previous posts we drew two support lines. It turns out that the Ether price reacts to both of them simultaneously. The white line is the area from which regular rebounds of the leading altcoin’s value occur. The green line, on the other hand, is the area of daily closing candles. Similar to Bitcoin, we see an attempt to break resistance on the RSI, and a bullish MACD. At the same time, the ETH price is just below the local resistance at $4.025. A surrender to the resistance, may once again force declines to the support marked by the white line. In turn, its breakout opens the way to $4,550.

Picture of Łukasz

Łukasz

Market Analyst

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this article

More analyses

All articles loaded
No more articles to load

More news

XRP

XRP outperforms Bitcoin and Ethereum

In the past week, XRP decisively outperformed its main rivals, Bitcoin (BTC) and Ethereum (ETH), in terms of capital flows. Moreover, it recorded an impressive $2.7 million…

Solana and Avalanche on the eye of investment funds

Two alternative coins, Solana (SOL) and Avalanche (AVAX), are gaining increasing interest and are successively attracting the attention of investment funds. Although bitcoin (BTC) remains the main…
All articles loaded
No more articles to load

Learn more

Cryptocurrency wallets

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it…
hardware wallets

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s…
Where to buy cryptocurrency brokers

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on.…
Trading cryptocurrencies

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want…
All articles loaded
No more articles to load

Latest news

All articles loaded
No more articles to load