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Today we'll cover the Technical Analysis of Bitcoin and Ethereum and discuss some potential trade setups that can play out in the coming week.
But before that, there's a major update regarding the Interest rates.
Federal Reserve Held Off on Rate Hikes
After a series of shooting interest rate hikes, the Federal Reserve on Wednesday held off on rate hikes but said two more are coming later this year to counter inflation.
The central bankers said it would take another six weeks to observe the effects of policy changes as the Fed battles an inflation war that has recently shown some encouraging but mixed indications. The Fed's key borrowing rate remains in a target range of 5%-5.25% as a result of the decision.
Since the FED has already dropped hints of 2 more hikes, we can expect the range to range between 5.25%-6% depending on the outcome of the unchanged hike.
Well, now that being said,
Let's have a look at how the markets reacted to the news of Pausing Interest Rate Hikes.
Most retailers had a bias towards long positions because they were pretty sure that the rate hike would be either very low or unchanged.
As soon as the news went public that 2 more rate hikes are likely to happen in 2023,
The whole market took a nosedive.
BTC/USD 15-minute Timeframe
As soon as the news hit the market, BTC tanked from $25,900 to $25,815.
Almost 4% drop within a span of 60 minutes.
BTC/USD Weekly Timeframe
Since 14 April, the price has been falling with some pullbacks but is getting a rejection from the trendline every time.
If you observe the chart of BTC/USD closely on a Weekly Time Frame
From June 2022 the price was moving in the range of $16,200-$24,300.
As you can see in the chart, in March 2023 the price broke the resistance at $24,300 and moved out of the channel and gave a short rally till $32,000.
After which it halted for a month and has been in a downtrend since April 2023.
BTC/USD Daily Timeframe
$25,411 was the crucial support that got broken after the news of pausing interest hikes and the speculation of 2 more hikes being imposed later this year.
However, after 24 hours of the news, the markets started rallying, and BTC regained its support at $25,000 and is once again approaching the weekly trendline resistance.
The Bitcoin price is $26,546 at the time of writing this newsletter.
The $24,131- $25,000 range is critical for BTC to hold as the last time, the BTC price jumped from $24K to $30K within a month.
As of now, there are 2 possible ways in which the BTC price action can play out.
The price consolidates, and the trendline breaks. This would be an ideal scenario for a long trade because the trendline has been rejecting the price for a while now.
Once it breaks, the stop losses of sellers would trigger, which would shoot the price up.
The prices face rejection from the trendline, and the supports at the level of $24,000 breaks which will trigger the stop losses of buyers, and the price may fall sharply
However, many may ignore a third possibility, but I think you should consider it as well.
The price gives a fake breakout of the trendline and directly crashes below the support.
Potential BTC trade setups
BTC on Daily Time Frame
A possible high-quality trade can be formed if the price comes in the $24k-$25k range.
If the price closes below $24,000, we can see a dip till the next ultimate support at the round level of $20,000.
If you put 200 EMA (Exponential Moving Average) on the daily time frame, you'll spot strong support at the $25,000 level.
We've already seen in the weekly timeframe that $24,000 is also a key support area.
BTC on a 4-hour time frame
The price is approaching the weekly trendline. The price has faced a strong rejection from the trendline since April 2023; if it manages to break it, there's a high possibility of strong upside momentum.
However, do wait for confirmation because many times, a fake breakout happens, and many retailers get trapped.
Taking an entry on the first pullback (ideally $27,200-$27,400) would be ideal.
Note: Key support zone for BTC - $24,000, $20,000 & $16,200
ETH/USD Weekly Timeframe
Ethereum has been in a sideways channel for the last one year and is currently in a downtrend for the last 2 months.
ETH has moved for a year in a range of 600-700 points, that is, from $1100 to $1800
After giving a fake breakout till $2100 and trapping retailers in April, the ETH price is now back in the sideways range.
While writing this newsletter, the price of ETH this Sunday is $1738.
The price is at very strong support around the level of $1700.
Historically during the bull run in 2021, ETH price pulled back to $1700 and created a new all-time high of $4868.
This support has been pushing the price up since 2021, and right now, Ethereum is trying to give a weekly close above $1700
ETH/USD Daily Timeframe
Just like Bitcoin, Ethereum has also been under a downtrend since 16th April 2023.
With the recent news around the hikes, the whole market went down, and ETH was no exception,
However, the news managed to bring Ethereum down from its major support of $1715, which it has held well since March 2023 but within 24 hours, ETH regained the historic support level.
Ethereum Medium Term Support and Resistance
Strong historical support level at between $1600 and $1500, with the wick of the last correction at $1450 being the bottom line support level to hold. As long as Ethereum continues to hold above $1450 at a high timeframe, the current drawdown remains a correction and the uptrend since January 2023 continues.
Short term Resistance at the trendline around $1850. A clean breakout could signal the end of the correction. Long term resistance at $2150 which was the yearly high made on April 16th. This level needs to be broken in order for the major uptrend to resume which has been stagnating for the past 2 months.
Potential ETH trade setups
ETH/USD On Daily Time Frame
The 200 EMA is at $1727, and we have seen that the price greatly respects this support level. Given that 200 EMA is also around the same level if the weekly close happens above $1750, we can expect a good upside momentum.
If the weekly close happens below 200 EMA, a downside momentum till the next support level of $1600 can be expected.
ETH/USD On a 4 hour time frame
Just like BTC, if you switch to a 4-hour chart on Ethereum
You'll see a high-probability trade setup.
ETH just formed a trendline and is going toward the next possible resistance at the $1760 level.
We have to see whether the price sustains or not.
If ETH manages to stay above $1760, then an upside momentum till the weekly rejection trendline is possible
If the price breaks $1715, there's a high probability of ETH falling back to $1600, which is the next possible support.
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