This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin: Powell triggers bearish lower high
Bitcoin has pulled back to levels last observed before Federal Reserve Chair Jerome Powell’s dovish comments on Friday, which created expectations for a potential rate cut in September.
As of this writing, BTC is trading slightly above $112,000, having reached a high of around $117,440 on Friday. Analysis of the daily chart shows that the retreat from the $117,000 peak has created a lower high near the resistance line defined by the previous bullish trendline originating from the April lows.
This lower high reinforces the earlier trendline breakdown, indicating a continuation of bearish price behavior. Additionally, the Guppy Multiple Moving Average (GMMA) indicator is set to confirm a bearish momentum shift, marked by the upcoming crossover of the short-term exponential moving averages (white band) falling below the longer-term averages (red band).
On the weekly chart, the MACD histogram has commenced the new trading week with a sub-zero reading, signaling the potential for increased downward momentum.
In summary, what does it suggest about a market that not only resists a sustainable rally fueled by favorable news – like Powell’s speech – but also continues to exhibit a series of bearish technical formations? I’ll leave it to the readers’ judgment.
Key technical support is found at the $110,756 level, aligning with the lower boundary of the Ichimoku cloud, with a stronger support area defined by the 200-day simple moving average near $100,000. On the other hand, reclaiming Friday’s high of $117,440 is crucial to revive the bullish scenario.
- Support: $110,756, $100,887, $100,000.
- Resistance: $117,440, $120,000, $122,056.
Ether: Decline in upward momentum
Ether (ETH) formed a doji candle with a significant upper wick on Sunday, indicating market indecision at record highs. This candlestick pattern occurs when the opening and closing prices align, portraying a stalemate between buyers and sellers.
However, the notably long upper shadow signifies that the bulls’ efforts to elevate prices faced substantial resistance from bears, who managed to pull the price back down before the close.
Although the doji pattern does not guarantee a reversal, it indicates uncertainty and a potential loss of upward momentum. It calls for caution as it often precedes a potential reversal or a consolidation phase where the market awaits new catalysts for direction.
A pullback seems probable, as the 14-day relative strength index continued to produce lower highs over the weekend, contradicting the new price peak. This so-called bearish divergence indicates a loss of upward momentum and frequently results in corrections.
Interestingly, ether traded 3% lower on the day at $4,624 at the time of writing, with charts suggesting support at $4,065, the level from which ETH rallied on August 20.
- Support: $4,065, $4,000, $3,805 (the 50-day SMA).
- Resistance: $5,000, record highs.
Read more: Bitcoin Reverses Powell Spike With a Flash Crash as Options Market Signals Jitters Ahead
