The restoration of the range and the movement to the resistance in BTC/USD and the retention of weekly support in ETH/USD in the next review from Cred and DonAlt, the authors of the Technical Roundup mailing list. This week, the authors supplemented the review with a section on trading in the range and a general model for trading altcoins.
Bitcoin: buyers restore the range and approach the resistance
BTC/USD tests weekly resistance at $38.2 thousand.
The reason for this movement was an unsuccessful breakdown below $30 thousand, which was redeemed and ended with a spectacular short-squeeze.
Last week, we mentioned that the restoration of the support of $32.3 thousand will be a very positive signal. Partly due to the purchases of Alameda and aggressive bullish positioning in short-term call options, the breakdown of the support of $30 thousand was redeemed, paving the way for a short-squiz. Technically, this movement made sense (an unsuccessful break down is a bullish factor), but it was not particularly generous for easy entry opportunities, especially for those who like to wait for a pullback.
What now?
First, the market is still in its 10-week range. So far, this has not changed. Buyers attempted a quick V-shaped recovery in early June, but without success. The price went down. Last week, sellers tried to collapse the exchange rate, but also unsuccessfully. The price went up. So far, no one has "won". Exit attempts in both directions ended as false breakouts, so the next weekly candle that closed across the range border is likely to be decisive (the probability of two false breakouts in one direction on the older timeframe is less).
Secondly, despite the limited range, the market structure in BTC/USD turned out to be reversed in the direction of growth: a larger maximum was formed on the daily timeframe. This is a bullish factor. However, even with a bullish bias on the daily timeframe, it is necessary to take into account the risk/return ratio. If $40 thousand is the upper limit of the range and the price fluctuates around it, and the nearest support in the event of a pullback is at $35 thousand, then buying under resistance after a vertical movement to it does not seem an attractive option. In our opinion, the best bullish scenario for the market would be to find support at the level of $34.6-35.7 thousand with a pullback.
Third, the opportunity for a straightforward technical transaction has already worked out. The price has reached from the restored lower limit of the range to its upper limit. The target level for this trading idea has already been reached. Now we are back in the territory of "coin tossing", with a rather unfavorable risk/return ratio for longs, unless there is a rollback to $34.6-35.7 thousand.
Fourth, it is important to always keep in mind the worst possible scenario. In our opinion, such a scenario would be a slow decline, correcting this local rally and not finding support at $34.6-35.7 thousand. This would remind us of the" Chinese pump " of October 2019, which turned out to be a local short-squeeze before the continuation of the bear market.
Finally, as we wrote in the review of July 14, this range is not necessarily decisive for the macro picture in BTC/USD. If the exchange rate soars up, it would be reasonable to reduce the risks in the region of $50 thousand. If it collapses, it would be reasonable to increase the exposure on the market in the region of $20 thousand or even $14 thousand. The breakout of the range will have a continuation, but an attempt to anticipate it may well turn out to be a frankly shitty deal.
Ethereum/Dollar Holds Support, ETH/BTC is inactive
ETH/USD is still in the range, and the market structure on the daily timeframe has not been violated. ETH/BTC has not moved at all.
Last week, we once again talked about the fact that the ETH rate, in fact, follows bitcoin. The pair against the dollar on the weekly timeframe held support better than bitcoin, but the rebound was not so impressive.
We have updated the daily range in ETH/USD: support - $1770, resistance - $2330. Now the price is at the resistance.
Our vision of the situation has not changed much. At the moment, it seems likely to follow BTC/USD, especially in the absence of a momentum from ₿0.055 in ETH/BTC.
EIP-1559 will most likely be activated on August 4. So far, it does not seem that this date is special in itself or that the market is preparing for a rally on the eve of it. This may still change, but at the moment it is difficult to justify such a scenario, given the horizontal movement in the pair to BTC. It may well be that the news was either embedded in the price back in the monstrous May rally, or - as in the case of Bitcoin halvings - there is a delayed price effect. Or maybe, to some extent, both.