It’s another TA-Tuesday. Let’s jump right to it – altcoins are still under pressure, but showing some signs of life.
The big picture still stands with a possible ABCDE correction. What troubles me is that we have almost no signs of weakness.
We are trading above the Ichimoku cloud and showed some strong buy reactions at around the 11.1k level (red line).
Nevertheless, we are not ruling out a possible sell-off to print the last leg of that correction. Watch the levels 11.1k and 10.3k.
On the topside, I expect some fireworks if we break above 12.5k (the grey line). The euphoria will be high and people will talk about new highs before we have even printed a daily close above 13.3.k (second peak). I do not believe that we will take out the recent high of 13.9k just like that, but this is just a gut feeling.
It looks a bit like a wounded animal. We broke down through both support levels: $260 and $221. We found support in the support zone, which is a very old level that was relevant in late 2018. Additionally, we also broke the medium-term trendline (black), which started in December 2018.
If that support zone does not hold, we might drop pretty fast down to the $170 area, as there is a liquidity vacuum inbetween.
But as I mentioned above, a wounded animal is unpredictable and I have the feeling that ETH$ could see some wild swings in both directions.
Here, the picture is fairly similar to that of ETH$. We went through the two support lines (red) and broke the medium-term trendline (black). We were not able to recoup any of those levels and are now also below the Ichimoku cloud, which turned bearish again.
In terms of the bigger picture: I do not expect a quick or sharp recovery. I do believe that we will trend lower towards the $63 level.
We are fighting around that last line of defence again: good buying interest came in around $0.28. You can see this over the past 12 months.
For the brave ones, you can place some buy orders within the support zone to speculate that we will again see some fear buying action come in. But stops must be taken below the $0.24 level. If we go through that, we can easily dive down to $0.14 (please see the daily chart here).
There is a possibility that we are in the making of a major reversal pattern called shoulder-head-shoulder. The last piece is the right shoulder, which is almost done. To confirm the possible pattern, we need to break through the neckline (black).
If this happens, the possible target of this pattern is roughly $200 lower from the neckline breaking point, which comes in at around $100.
I know it is a bold call, but so far this looks like somerhing out of a charting text-book.
After we broke the nice uptrend, we saw a severe sell-off down to the important support level of $3.50 (red). Around this level, we also have a larger liquidity pool, which currently seems to be working like a magnet.
The way the market looks right now, I am tendinf towards the call that we will break the $3.50 level on a daily closing basis and head straight lower to $2.50.
Most of the altcoin pairs versus BTC look very similar and we will cover them in our Rotation Report on Thursday. Chartwise, they are still in a bearish setup, but have shown some recovery moves after a harsh week.
Patrick Heusser & the Crypto Broker TeamRead more