Let’s continue our cryptocurrency market analysis routine today. The goal is simple: to understand the current structure of the market and, if possible, determine multiple scenarios in order to avoid surprises in the coming weeks. Does Ethereum have a strong influence on the market? For now, the altcoins are managing to continue a rebound that has already started in recent days. Will this continue? Let’s go straight to our charts.
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The market has broken out of its initial resistance, but it is not over yet.
Since last week, the market has managed to squeeze out of the USD 963 billion resistance under which it has been evolving for several weeks. By taking the Fibonacci of the oscillation within range, we were able to determine a first objective, namely the 1.618 of Fibonacci. However, this has already been achieved. So what would be next?
In order to maintain the bullish trend as a whole, the market may not return below 963 billion from now on. Otherwise, it would look like a false bullish breakout and range return. Pretty soon the market needs to recover to $1071 billion to resume the uptrend. This would allow us to return to support from the summer of 2021, which will likely act as a resistance for the market.
A daily bullish trend on altcoins thanks to Ethereum?
When we take the weight of Bitcoin and Ethereum out of the market cap, the structure is different. Currently, altcoins are in a bearish swing pattern on a daily scale with highs of $690 billion and lows of $320 billion. However, within this bearish swing, we have an internal structure that is bullish. After breaking through the high of $393 billion, altcoins registered a new high of $410 billion and a new low of $379 billion.
Since the internal structure is bullish, the chances of an upward continuation are more important. So by breaking the current high, the altcoins could free themselves from a former support that is merging. 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 in the same dynamics since last week. It confirmed the downtrend in which it has registered with a bottom and a top that are lower than the previous one. This is the basis of a downward trend. So, as Bitcoin loses momentum, altcoins take advantage to suck some of the capital out of the market. For now, we need to have a bearish bias to avoid going against the trend. So if bitcoin dominance breaks off from the current low, we may see a continuation of the downtrend. In this case, our first target could be a return of bitcoin dominance at 41.32%. It remains to be seen, in the event of a return to this level, whether the price will continue to fall or recover.
To hope for a return to the rise of bitcoin dominance, the price will have to break away from its 43.56% peak to change its structure. This, on the other hand, will allow to regain the pivot zone that has acted as support and resistance for several months. However, most of the move is not played yet. To hope for a strong recovery for Bitcoin on a larger time scale, it will absolutely have to break free from a previous peak of 44.46%. This level currently acts as a resistance.
Ethereum, the catalyst for the altcoin wave?
Like altcoins, Ethereum’s swing pattern is bearish against Bitcoin. However, for several days now, the flagship of decentralized finance has returned to color and has withdrawn from certain technical levels. With the daily pattern currently bullish, Ethereum has been in its decline for a while, allowing altcoins to take advantage of it with a bounce. This has simultaneously undermined bitcoin’s dominance.
Ethereum is currently at a technical level where the price has been reacting since August 2021. Will it be able to overcome this? If it succeeds, it will have registered a new peak that will allow to expand the daily trend. But this rebound, how far can it go? Theoretically, in a bearish swing pattern against bitcoin, ethereum should stop at the swing high (red zone) between 0.075 and 0.076 bitcoin. However, it could very well move lower with a bearish breakout from the internal structure. For this scenario to take place, the previous low must be broken.
When it comes to shitcoins, I have to admit that it is always difficult to gauge the temperature of this market given the many exotic cryptocurrencies out there. At this point, it should be understood that the structure of the weekly swing is bearish, as is the internal structure. The daily swing pattern is also bearish. So only the daily internal structure is bullish. Currently, the Shitcoin Index price is at the upper end of the swing structure. This is an important moment where we can 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. In addition, if the index manages to overcome the $2,912 mark, it would also allow for a change in the internal weekly structure so that it is bullish. So new bullish targets may be considered. However, the most likely scenario is a reversal of the daily internal structure with a breach of the low at $2418. This would allow the index to complete its daily pullback and move towards the low of the daily swing pattern at $1676.
Here we are at the end of the crypto point for this weekend! Hoping it can shed some light on the current situation of the cryptocurrency market, keep a close eye on the weekly close tonight and the monthly close that is fast approaching! For now, Ethereum is continuing its bullish pullback and taking altcoins in its path. However, the asset is coming up against bitcoin at major technical levels. Is the trend starting to pick up steam? Also, keep an eye on bitcoin dominance to be prepared for a reversal of the situation if necessary. In any case, don’t hesitate to read our latest technical analysis of Ethereum against the dollar!
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