The Bottom Line:
- Bitcoin is battling at the weekly 12 EMA, a key support level that has guided the market for months
- Bulls are defending the value area high from October-November 2021, but need to confirm a daily uptrend to maintain the status quo
- Bears aim to break down into the value area and establish a new downtrend, potentially leading to a weekly tightening range
- Ethereum is showing relative strength against Bitcoin, with a potential weekly higher low forming
- The outcome of this battle will determine the direction of the crypto market in the coming weeks
Bitcoin Bulls Defend Key Support at October-November 2021 Value Area High
Bulls Defend Key Support at October-November 2021 Value Area High
Bitcoin is currently engaged in a critical battle at the weekly 12 EMA, which has been a reliable guide for the cryptocurrency for several months. Bulls are defending the key support level at the value area high from the October-November 2021 range, just before the previous all-time highs. This zone has been highly reactive, and as long as bulls can hold this level, the consolidation is considered healthy.
Bears Struggle to Gain Momentum Despite Lower Lows
Despite bears pushing for lower lows on two occasions, they have failed to see significant follow-through. This suggests that bears may be exhausting their efforts. However, bulls need to shift from playing defense to offense if they want to start making gains. For bulls to come out victorious in this battle, they need to surpass the daily EMAs and confirm a daily trend change. This would maintain the status quo of weekly higher lows set off the 12 EMA and potentially form a weekly cup and handle pattern.
Potential Scenarios and Key Levels to Watch
If bears manage to break down into the value area, they will aim to continue the downtrend and seek follow-through. In this case, the market would still look for a weekly higher low, but a pullback into the value area could lead to a weekly tightening range until the end of summer. On shorter timeframes, an hourly bounce is underway, and bulls are looking for a lower high to form near the 12 EMA. A successful hourly uptrend would set the stage for a 4-hour bounce, providing room for a 4-hour lower high compared to the 66.5k level. Bulls must then replicate this process on the 4-hour and daily timeframes to maintain their advantage.
Confirming a Daily Uptrend: Essential for Maintaining Bitcoin’s Status Quo
Bulls Aim for Daily Trend Change to Maintain Status Quo
For Bitcoin bulls to come out victorious in this critical battle, they need to surpass the daily EMAs and confirm a daily trend change. This would maintain the status quo of weekly higher lows set off the 12 EMA and potentially form a weekly cup and handle pattern. A successful daily trend change would signal that bulls are not only playing defense but also going on the offensive, which is essential for making gains.
Bears Target Value Area to Extend Downtrend
If bears manage to break down into the October-November 2021 value area, they will aim to continue the downtrend and seek follow-through. In this case, the market would still look for a weekly higher low, but a pullback into the value area could lead to a weekly tightening range until the end of summer. Bears are currently struggling to gain momentum despite pushing for lower lows on two occasions, suggesting that they may be exhausting their efforts.
Short-Term Bounces and Key Levels to Monitor
On shorter timeframes, an hourly bounce is underway, and bulls are looking for a lower high to form near the 12 EMA. A successful hourly uptrend would set the stage for a 4-hour bounce, providing room for a 4-hour lower high compared to the 66.5k level. Bulls must then replicate this process on the 4-hour and daily timeframes to maintain their advantage. Key levels to watch include the October-November 2021 value area high, the weekly 12 EMA, and the daily EMAs. The outcome of this battle will determine whether Bitcoin can maintain its status quo or if bears can gain the upper hand and extend the downtrend.
Bears Aim to Break into Value Area and Establish New Downtrend
Bears Aim to Break into Value Area and Establish New Downtrend
Bears are striving to crack down into the crucial value area from October-November 2021, aiming to keep the downtrend going and start seeing some follow-through. If they succeed in pulling back into this value area, the market will be looking for a potential weekly tightening range to the end of the summer. While a weekly higher low would still be expected, a break into the value area would signify a shift in the market’s dynamics.
Falling Wedge Pattern Suggests Potential Exhaustion
A falling wedge pattern can be observed on the daily chart, with lower lows lacking significant follow-through. This pattern suggests that bears may be experiencing some exhaustion in their efforts to push prices down further. If the weekly 12 EMA is going to hold, it will likely be through a bullish breakout of this falling wedge pattern. Traders should keep a close eye on this pattern and the weekly 12 EMA for signs of a potential trend reversal.
Altcoins Show Relative Strength Amid Bitcoin’s Battle
As Bitcoin faces this critical battle, some altcoins are displaying relative strength. Ethereum, in particular, has been showing signs of resilience, with its recent lower lows not experiencing the same level of follow-through as Bitcoin. If Bitcoin dominance continues to decline while altcoins lead the way up, it could be a positive sign for the overall crypto market. However, if the entire space moves down with altcoins leading the decline, it would be a less favorable scenario.
Ethereum Displays Relative Strength with Potential Weekly Higher Low
Ethereum Displays Relative Strength Amid Market Downturn
As the crypto market faces a challenging period, Ethereum has been showing signs of relative strength compared to Bitcoin. While both cryptocurrencies have experienced lower lows, Ethereum’s downward movement has been less pronounced, with the price action remaining largely sideways. This resilience suggests that Ethereum may be better positioned to weather the current market conditions and potentially lead a recovery.
Potential for a Weekly Higher Low and Bullish Patterns
Ethereum bulls are currently defending the key support level at $3,651. If the price can consolidate above this level on the daily timeframe, it could set the stage for a potential inverse head and shoulders pattern. This bullish formation, if confirmed, would be a positive sign for Ethereum, especially if it occurs near the weekly 12 EMA, which has been acting as a significant support level. Additionally, a successful defense of the current lows could lead to the formation of a weekly cup and handle pattern, further strengthening the bullish case for Ethereum.
ETH/BTC Ratio Suggests a Shift in Market Dynamics
The ETH/BTC ratio has been displaying notable strength recently, with the weekly chart showing signs of a higher low formation. This is a significant development, as Ethereum hasn’t experienced a healthy weekly higher low against Bitcoin in over a year. If the ETH/BTC ratio can confirm a weekly trend change by breaking above the 0.0744 level, it would mark the first weekly uptrend in 18 months. This would be a strong indication that market dynamics are shifting in favor of Ethereum, and could potentially signal the beginning of a new bull cycle for the second-largest cryptocurrency.
Outcome of Bitcoin’s Battle to Determine Crypto Market Direction
Bitcoin’s Fate Hangs in the Balance as Key Levels Are Tested
The outcome of Bitcoin’s battle to determine the crypto market’s direction remains uncertain as the leading cryptocurrency continues to test crucial support levels. The weekly 12 EMA has been a reliable guide for months, and bulls are currently defending the key value area high from the October-November 2021 range. Despite bears’ attempts to push prices lower, they have struggled to achieve significant follow-through, suggesting that their efforts may be waning.
Bullish Scenario: Reclaiming Daily EMAs and Confirming Trend Change
For Bitcoin to maintain its bullish stance, it is essential for bulls to reclaim the daily EMAs and confirm a daily trend change. This would preserve the status quo of weekly higher lows set off the 12 EMA and potentially form a weekly cup and handle pattern. If bulls succeed in this endeavor, it would signal that they are not only defending key support levels but also going on the offensive, which is crucial for generating positive momentum.
Bearish Scenario: Breaking into Value Area and Extending Downtrend
On the other hand, if bears manage to break down into the October-November 2021 value area, they will aim to perpetuate the downtrend and seek further follow-through. In this case, while the market would still anticipate a weekly higher low, a pullback into the value area could result in a weekly tightening range until the end of summer. This scenario would indicate that bears have gained the upper hand and could potentially lead to a more prolonged period of consolidation or downward pressure on prices.
