Today, let’s continue our cryptocurrency market analysis routine. The objective is simple: understand the current structure of the market and determine, if possible, several scenarios so as not to be surprised during the coming weeks. Does Ethereum have a strong influence on the market? For the moment, the altcoins manage to extend a rebound that has already started in recent days. Will this one continue? Let’s head straight to our charts.
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The market has broken out of its first resistance, but it’s not over.
Since last week, the market has managed to extricate itself upwards from the resistance at 963 billion dollars under which it has been evolving for several weeks. By taking the Fibonacci of the oscillation having had inside the range, we were able to determine a first objective which is the 1.618 of Fibonacci. However, this has already been achieved. So what would be next?
From now on, to preserve the bullish trend as a whole, the market must not return below 963 billion. Otherwise, it would look like a false bullish breakout and a re-entry of the range. Pretty soon, the market needs to rally back to $1071 billion to resume the uptrend. This would allow us to return below the support of summer 2021 which will probably act as a resistance for the market.
A daily bullish trend on altcoins thanks to Ethereum?
When we remove the weight of Bitcoin and Ethereum from the market capitalization, the structure is different. Currently, on a daily scale, altcoins are in a bearish swing pattern with a high of $690 billion and a low of $320 billion. However, inside this bearish swing, we have an internal structure that is bullish. Having broken the high at $393 billion, altcoins registered a new high at $410 billion as well as a new low at $379 billion.
Since the internal structure is bullish, the probabilities of an upward continuation are more important. Thus, by breaking up its current high, the altcoins could free themselves from a former support which is in confluence. This would allow the market to continue its bullish pullback from the swing pattern which, I remind you, is bearish. However, with a breakout of $379 billion, the internal structure will turn bearish.
Bitcoin still dominates in a bearish situation
Bitcoin has been evolving, since last week, in the same dynamic. It confirmed the downtrend in which it is registered with a bottom and top which are lower than the previous ones. This is the basis of a downtrend. Thus, with Bitcoin losing strength, altcoins are taking advantage of this to suck some of the capital out of the market. For now, we need to have a bearish bias to avoid being against the trend. So, if bitcoin dominance breaks down from its current low, we can see a continuation of the downtrend. In this case, we can have as a first objective a return of the bitcoin dominance on the 41.32%. It remains to be seen, in the event of a return to this level, whether the price will continue to fall or whether it will rebound.
To hope for a return to the rise of bitcoin dominance, the price will have to break free from its peak at 43.56% for the structure to change. This will allow, on the other hand, to regain the pivot zone which has acted as support and resistance for several months. However, most of the movement will not yet be played. To hope for a strong recovery of Bitcoin on a larger time scale, it will imperatively have to break free from a former peak at 44.46%. This level is currently operating as resistance.
Ethereum, the catalyst for the surge in altcoins?
Like altcoins, Ethereum’s swing pattern is bearish against Bitcoin. However, for several days, the flagship asset of decentralized finance has resumed in color and pulled out of certain technical levels. With the daily pattern currently bullish, Ethereum has been in its pullback for some time, which has allowed altcoins to take advantage of it with a bounce. This has undermined, in parallel, bitcoin dominance.
Ethereum is currently on a technical level where the price has been reacting since August 2021. Will it be able to overcome it? If it succeeds, it will have registered a new top which will make it possible to extend the daily trend. But this rebound, how far can it go? Theoretically, ethereum being in a bearish swing pattern against bitcoin, it should stop at the swing high (red zone) between 0.075 and 0.076 bitcoin. However, it may very well turn lower with a bearish breakout of the internal structure. For this scenario to happen, the previous low will need to be broken down.
As for shitcoins, I must admit, it’s always difficult to take the temperature of this market given the many exotic cryptocurrencies that can be found. For the moment, it should be understood that the weekly swing structure is bearish as well as the internal structure. As for the daily swing pattern, it is also bearish. Thus, only the daily internal structure is bullish. Currently, the price of the Shitcoin Index is at the upper limit of the swing structure. This is an important moment that lets us consider two scenarios:
The first is a bullish breakout of the swing structure (price closes above $2745). This would allow for a bullish daily swing pattern. Moreover, if the index manages to overcome the 2912 dollars, it would also allow a change of the internal weekly structure so that it is bullish. Thus, new bullish targets can be considered. However, the most likely scenario is a reversal of the daily internal structure with a breakout of the low at $2418. This would allow the index to complete its daily pullback and head towards the low point of the daily swing pattern at $1676.
Here we are at the end of the crypto point for this weekend! Hoping that it can shed light on some gray areas regarding the current situation of the cryptocurrency market, be attentive to the weekly close tonight as well as the monthly close which is fast approaching! For now, Ethereum continues its bullish pullback, taking altcoins in its path. However, the asset is coming at major technical levels against bitcoin. Is the trend starting to run out of steam? Also continue to monitor bitcoin dominance to be prepared, if necessary, for a reversal of the situation. In any case, if you want to read our latest technical analysis of Ethereum against the dollar, do not hesitate!
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