Caveat: the following language is to be taken as “technical” rendering of market prices. Fundamentals drive these markets just like any other market. We’re simply interpreting the technical aspect of these prices from a “price action” perspective.”
Bitcoin, Ethereum, and Ripple have been trending lower since their December 2017 highs. That case is obvious.
But the important question to ask is whether their recent recovery from the February and April 2018 lows indicates a potential trend reversal or a mere “correction” in the context of a solid downtrend.
Although nobody can be certain as to which scenario the price movements represent, we can at least look at the price action points that may indicate the critical areas that will decide whether the trend will continue downward or break upward.
Bitcoin
Following its February low of 5857, BTC establishes a higher swing low point at (A), breaking out of yet another redrawn downtrend line (B). For this reaction to be considered a trend reversal, it would have to break above the swing high point at (C). Instead, price lost momentum and established a lower sing high point at (D). Now, the price action looks like a solid downtrend, to which (D) was a mere correction. To confirm this downtrend, price would have to violate the support levels at (A) and (E). This is what we’re watching out for. If it fails to break below these levels, then it can mean a potential trend reversal, in which price would have to break above (D) before challenging resistance at (C), or price can get stuck in a trading range between support at (E) and resistance at (C).
Ethereum
The Ethereum chart is a bit like Bitcoin’s except that the downtrend and trend line break is much cleaner in that it hasn’t been challenged and redrawn as many times as BTC. We see the April lows at (A) establishing support. We see a clean break above the downtrend at (B) that reverses at (C), establishing its first resistance level since the trend line break. So now we have an established support level at the swing low (A) and resistance level at the swing high (C). What we are looking whether price will fall below or bounce at (D). Similar to the BTC scenario, this may mark a point at which ETH either reverses or continues to trade within a range.
Ripple
Like BTC and ETH, Ripple (XRP) price action is correlated but much more subdued. Like ETH, it established its sequential lows in February (A) and April (C), both of which can be viewed as support levels. Its consecutive lower highs at (B) and (D) also support the case that XRP is in a downtrend. However, price at (E) seems to be bouncing off the earlier support level (A). Similar to BTC and ETH, we are looking to see whether price will break below the two support levels, and if not, whether it will break above the two consecutive resistance levels.
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