Cryptocurrency Market update – Aug-19-2023
After a long consolidation near the critical $30K threshold, the price has encountered significant rejection, resulting to 11% swift decline. However, the current scenario shows the price consolidating close to the crucial prior cycle low. What we see now is very similar to what happened in March where the price action lost the key-level down to $21k and had good reversal up to the next cycle.
The goal here is to see a 60-day cycle low form above or at the prior weekly cycle low. That at least puts a floor on our positions and then give this market the time to recover and move higher from there. This tells us that a major move is now beginning to unfold, and the primary direction of that move will be revealed over the coming weeks.
The bulls ideally would have preferred this market to simply break to the upside and run. However, major lows and reversals also occur in an expansion volatility environment like the one being witnessed presently.
BTC daily chart shows a forceful rejection leading to a rapid retrace to cause the price to breach a significant and pivotal support area around $26k-27k level. Therefore, if it receives support and witnesses an upsurge in buying activity, market participants could potentially anticipate a good reversal.
I’ve talked about a first move lower to complete the cycle low, before heading higher. Ideally, we would have seen this trend sideways then launch higher. Now we have to wait and see if we can get a good reversal, confirm the cycle low, and at least put in a floor from which we can defend our position.
Two scenarios could play out here: we could get a good reversal straight up from now without further declining or have a further drop to form a clean cycle low (floor) before making an upsurge to recapture the $30-31k level.
What we should expect for the bullish case to remain, is a relatively quick recovery of good size move up to $30k level. Still room for that one good move higher especially, if it can break above the recent high around $28-29k level.
Chart 1. BTC forceful rejection leading to a rapid retrace to cause the price to breach a significant and pivotal support area around $26k-27k level.
BTC weekly chart shows a dominant decline which suggests that a lower level of the 4-year cycle is still in the cards. Bitcoin revisit to the sub-$25k range could re-enforce a lengthy sideway consolidation which could result to any of the two scenarios earlier mentioned.
However, the price action within this critical support zone carries substantial significance, as the $25K level has long served as crucial psychological support. Therefore, we could potentially anticipate a reversal if the buying activities increase.
Conversely, without such increased buying activities, the price might breach this mentioned support level, potentially triggering a cascading effect that drives it toward the notable support area at $20K (cycle low).
We have the cycle low to contend with in an asset class like BTC and it’s the area I don’t want BTC price action to lose.
Chart 2. BTC dominant decline which suggests that a lower level of the 4-year cycle is still in the card.
ETH retraced similar to the BTC chart. Most importantly, there is a rising wedge formation supported with decreasing volumes.
We need to see the price action recover and move above the 10-day MA. This will give a bullish view of Ethereum breaking out of the downward channel.
For the bullish option, we need a new positive consolidation and a return now above $ 1700. Then the conditions for the formation of a new higher low would be created. Our next bullish target is the $1900 resistance zone. A break above that level would take us back to the rising portion of the 4-year cycle.
We need to be patient and wait for more confirmation that, we’re breaking out of the declining phase of the market.