The crypto markets, both Bitcoin and altcoins, have been on fire for the past couple of weeks. Bitcoin has traversed the entirety of its downtrending channel structure, and was banging on the limits of 2019’s market – until yesterday, when it sold off heavily at $9.1k. This is probably the most important level for Bitcoin to beat in 2020.
As a consequence, this week is likely to be very important. If the leading crypto can climb above these levels, it will set a bullish tenor for the entire year – a big year considering the upcoming halving. On the other hand, rejection around this price area will see Bitcoin dragged back down toward $6-5k; and this will probably drag the rest of the market down with it.
We have seen a mini “alt season” in the past few weeks, and a welcome Bitcoin run. Now, it’s time to really decide what the long term trends will be for both Bitcoin and altcoins.
OKEx’s exchange token, OKB (now mercifully trading on FTX), is doing pretty well for itself in the new year. It has cleared the most important inflection zone on its chart, and is so far holding this level after a retest of it.
We can see this area, around $2.80, on the 3-day chart. There is currently a lot of contention, with rapid price fluctuations clearly influenced by Bitcoin’s dip yesterday. This is allowing some time for the moving averages to catch up with price.
Volume is really dropping off, though, as price has risen, which probably doesn’t speak well to the bull case. We’re seeing a flat contraction on the histogram so far, which is a pretty good sign that momentum to the upside can perhaps be preserved.
And indeed, if we head to the daily chart, we see that the histogram’s decline after a long period on the positive side is falling gracefully: there is a decelerating contraction, with strong buying below the 21 EMA.
Ultimately, OKB staying above the $2.80 zone is going to end up being very bullish for the exchange token.
OKB is already quite highly valued on the market cap rankings, currently 21st per CryptoCompare’s index. Volume on the FTX exchange is worrying, but on other exchanges this seems to be less of an issue. If it continues to hold the important level at $2.80 and lay a strong foundation, we could see further gains.
The leading crypto yesterday took its biggest correction since starting its present uptrend on January 2, and it just so happens that the selloff came precisely at an extremely critical resistance level on the Bitcoin chart. As such, this was not a completely unpredictable move; the medium timeframe uptrend is still intact, and Bitcoin can still go on to break this level.
We can see on this daily chart how far away from the EMAs price has extended. One can see this as a healthy move, allowing the market to digest the blistering uptrend that has obtained for weeks.
But of course, it still is a rejection, and a rejection at a very critical level. We must accommodate the bearish case, here. On the 3-day chart, we see what is at least for now a double rejection at the $9,100 resistance, and at the downtrending resistance top of the bearish parallel channel that Bitcoin has been in since July.
We see hidden bearish divergence showing up on the RSI (also on the daily and 2-day); and we can note that the histogram’s bullish acceleration has painted a more modest bar on the last close.
All of this is assuming that Bitcoin has indeed been contained at $9.1k: for the hidden bearish divergence reading to stick, this has to be the top of the Jan 2 uptrend. If we go to the weekly chart, however, we see that the histogram is still looking bullish.
The histogram here has put in a quite bullish uptick for the week, as the EMAs continue to contract bullish: we see that the 8 EMA has already crossed the 55 and looks set to cross the 21. The RSI has re-engaged the inflection zone just above 50%. And price generally has closed far above the important 21-week EMA. In all, there is plenty of material here that we can use to not write off Bitcoin’s rise.
It seems that this week will be very critical. $9.1k should decide the direction for Bitcoin going into 2020, and the contest is still not decided. The initial rejection needs time to digest, and many indicators are still bullish – although the picture is becoming mixed.
Ethereum, the leading altcoin, had a good week, and we have noted here how it has started to trade up with large Bitcoin moves. This is a break in trend from H2 2019, when Ethereum sold off on almost every large Bitcoin move – no matter which way the latter was moving.
On the weekly ETH/BTC chart, we log a break in the histogram downtrend, away from a flat bearish expansion. Price was rejected, again, near the 21 EMA; but it also close above the 8 EMA. Therefore, we are somewhat likely to see trading within this shrinking range during the coming week.
If we look at the ETH/USD weekly, things are looking even better. Last week, Ethereum managed to close over both the 21 EMA, and the important $160 inflection line. Volume increased a lot for the week, although there was plenty of selling at the top of the large bullish candle.
Ideally, we will see Ethereum trade mostly above the 21 EMA and definitely close above it next week. But we have, in recent memory, see it close above the 21 only to have a massive dump back through it the following week (see September candle).
Moving to the daily USD pairing, we see that Ethereum looks rather likely to correct soon. Its RSI trend has been strong and has kept up with price; ditto for the histogram. But the RSI trend looks like it’s buckling, and price has flung far away from the moving averages.
The band of blue support, although resting under the critical $160 mark, would be a good place for Ethereum to consolidate and confirm support in the coming days.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
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