After a fall of more than $13,000 that we saw between 5 and 12 May, Bitcoin stopped in the area of $28,500 technical support. There have been many different kinds of demand reactions in this area. It was no different now.
This time, however, this rebound turned out to be highly modest; as a result, Bitcoin has been moving in a horizontal trend for three weeks. The rebound from the lower bound of this formation observed last weekend may drive an increase towards its upper limit, i.e. resistance of $31,500.
However, it seems highly probable that the increases observed since Saturday will not lead to a permanent change in the market attitude and the return of BTC to the path of long-term gains. For this to happen, the quotations of the oldest virtual currencies would have to break above $31,500.
Considering that consolidations are corrective formations and, statistically, more often, the market breaks out of these systems in the direction consistent with the previous move there is a high probability that there will be a more significant supply response in the area of this resistance. It could signal a potential for further declines in the region of $28,500, even further toward $24,000, or even below $20,000. This scenario supports the fact that the upper limit of this system coincides with the measurement of 38.2% Fibonacci retracements from an earlier downward impulse.
This prediction can change if Bitcoin breaks above the technical resistance of $31,500. Then we could expect a continuation of increases towards $34,500, or further to $37,000.
Looking at the Ethereum quotes, we notice that, in line with our last week’s projection, the cryptocurrency’s rate in the second half of last week broke below the technical support of $1,900 and slipped as much as $1,730.
It is where the demand reaction reappeared last weekend. As the new week starts, it has led to a re-test of a previously defeated support (now resistance) of $1,900.
The immediate future of ETH will now depend on what happens around the level currently being tested. Its permanent defeat, i.e. a break above $1,900, could open the way to further increases towards $2,150 or further towards $2,350.
However, the emergence of a more significant supply response at this point, signalling a potential rejection of the resistance currently tested, could, in turn, indicate a potential for a further decline to $1730 or even further toward $1400.
Looking at the MATIC quotations, we can see its price has been in the horizontal trend for almost three weeks between the technical support of $0.57 and the resistance of the $0.75.
If the increases observed since last Saturday will continue, the MATIC quotations could return to $0.75. However, considering that this resistance coincides with the measurement of 38.2% Fibonacci retracements, it seems highly probable that more supply pressure will reappear in its vicinity.
It is also worth remembering that consolidations are corrective patterns, which in this particular case increases the probability that the market will try to break out of this pattern with the bottom and further decline even towards $0.45.
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