Following Rally, Bitcoin and Ethereum Face Resistance
- Bitcoin and Ethereum have surged by over 28% over the past two weeks.
- Both assets appear to be struggling to break through their 200-day moving averages.
- Meanwhile, sell signals are starting to appear.
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The top two cryptocurrencies, Bitcoin and Ethereum, are consolidating below a stiff resistance level. A steep correction could be on the horizon.
Bitcoin, Ethereum Struggle to Break Out
Bitcoin and Ethereum have remained stagnant over the past few days even as lower cap assets rally.
The top two crypto assets have shown a strong correlation coefficient over the past two weeks. They have largely surged in tandem, gaining more than 28% in market value. However, both Bitcoin and Ethereum appear to have reached a critical resistance while sell signals are beginning to surface.
Bitcoin has been trying to break the 200-day moving average since Mar. 28, but has been unsuccessful. Although resistance tends to weaken over time, the trading volume appears to be fading around the current price level. The lack of buying pressure could lead to a rejection for Bitcoin to collect liquidity before advancing further.
The Tom DeMark (TD) Sequential Indicator adds credence to the short-term pessimistic outlook as it is currently presenting a sell signal on Bitcoin’s daily chart. A spike in profit-taking could validate the bearish formation, resulting in a one to four daily candlesticks correction. Under such circumstances, Bitcoin could drop to the demand zone between $43,760 and $41,460.
Ethereum’s uptrend also appears to have been halted by the 200-day moving average at $3,500. As Ethereum continues to trade below this crucial resistance level, the chance of a brief correction increases. Moreover, the TD Sequential Indicator is anticipating a bearish scenario.
The popular indicator has flashed a combo 13 candlestick on Ethereum’s daily chart, which can be considered a sell signal. If sell orders increase around the current price levels, Ethereum could drop to $2,870 or $2,720 before attempting to reclaim the 200-day moving average.
While Bitcoin and Ethereum appear to have encountered stiff resistance, some analysts believe that consolidation is suitable for future price growth. It’s worth noting that a daily candlestick close above the 200-day moving average could invalidate the short-term pessimistic outlook. If Bitcoin breaches the 200-day moving average, it could surge to $5,200. Ethereum, meanwhile, has a shot at $3,900 if it can break through.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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