06 August 2019

Technical Analysis Tuesday: Is BTC still in a potential ABCDE correction?

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

It’s Technical Analysis (TA) Tuesday

BTC$ (daily)
We have seen a pretty strong bounce since we dipped down last week to the red trendline.  Already last week, we stated that there was a lack of selling pressure compared to previous waves down. Volumes have picked up since then, indicating that we might be close to another decisive move.

Nevertheless, until a chart pattern is really fully confirmed and activated, it only remains a POTENTIAL pattern, with not just one possible outcome. Speaking of which, we might still be within the (potential) ABCDE correction, having printed the “C” low in a rather complex way, and are now up to the “D” high.

This potential “D” high fits very nicely with the potential downtrending line, and hints at a possible rejection of BTC at the 12,000 BTC$ level, which we are currently testing as we speak.

An immediate breakout out of this corrective pattern would open up the way to 13,200 and 14,000: both targets were previous highs. Above those, the sky is the limit.

Nevertheless, we do need to break with even more volume than we saw during yesterday’s trading session, and this might be hard during the still ongoing holiday season.

On the downside, we do have the round marks of 11,000 and 10,000 as minor supports, with BTC being a “strong buy” below 10,000, printing the “E” type low. Stops have to be taken carefully, with the “old” level 8.9k still being our strong support. As mentioned in our last report, around the 8.9k level is the mark of the Fibonacci extension target. If that level breaks, we can easily expect to see 7.5k within a very short time.

In general, what we need for a trend change, or further move lower, is a spike in traded volumes. Volume precedes price, as traders say, the next move and direction will not occur as long as we tread water and just stay within the corrective July (and now into August) pattern.

It’s about TA in this report, but let me nevertheless throw some other market behaviour into the mix… There is often the proverbial “Turnaround Tuesday”, where the heavily battered old markets might normalise and rebound, which would certainly remove some of the buying pressure on BTC. Hence, the rejection of 12,000 is more than just a low single digit probability.

ETH$ (daily)
We are still fighting along the bullish trendline, which comes in at around $200. The resistance at $230 (we are currently trading there with low conviction) needs to be taken out on the topside to gain some fresh momentum to the upside. Otherwise, if we break the line (black) we might dip down fairly quickly to the area of $160-150.

XRP$ (weekly)
Ripple seems to have become pretty much pegged to the $30 level. This will most likely continue until we see a trend change with volumes picking up again.

LTC$ (daily)
Litecoin lit some fireworks yesterday around the halving block, but since “expected news are no news” it quickly got sold off afterwards. Indicators are in rather neutral territory, and although we broke the bullish trendline, re-tested, and spiked, the next move of Litecoin is pretty much a fifty-fifty situation. The next resistance is at the $120 level, and the interim high of $140, on the downside supported at the $90 level. Only a break below the $80 level would indicate further weakness and a worsening of the current picture (break of the 200 daily moving average).

The heavily battered fork of Bitcoin seems to be trending up nicely, but with small advances and low daily increments. Heavy resistance is to be expected at the $400 level. The 200 daily moving average is holding as a support so far, but similar to LTC, a break would indicate additional weakness.

We will be covering most of the top 20 altcoins on Thursday in our Rotation Report.