Published
4 years ago on
January 30, 2020
Ethereum (ETH) is struggling to break above the 200-day moving average but so far it has miserably failed. This level also corresponds to a previously broken market structure which will now serve as a strong resistance. It appears that the recent bullish move in the market has now come to an end. Speculation on how the cryptocurrency market could rally on uncertainty in the stock market due to the Coronavirus or political developments regarding Trump impeachment and Democratic presidential primaries now appear baseless as the stock market has started to decline. We know from the past that it does not take long for the cryptocurrency market to catch up whenever the S&P 500 (SPX) enters a major downtrend.
The daily chart for ETH/USD shows that the price might have formed a double top here and could now begin its downtrend. It is pertinent to note however that this downtrend would not be the same as the ones we have seen before as the price would be breaking below key support levels. Meanwhile, Bitcoin dominance (BTC.D) is also preparing for a major move. If we see a break out of the ascending triangle, that would be an extremely devastating event for the entire cryptocurrency market. The whole Bitcoin being digital gold or a safe haven asset narrative is staged to say the least. Long term trends are more clearly seen on the charts and they paint a gloomy picture based on what is going on in the stock market at the moment.
We can also see on the daily chart for ETH/BTC that Ethereum (ETH) is now ready to make a key decision against Bitcoin (BTC) as well. This decision could pull the price below the symmetrical triangle because this triangle could be classified as a bearish pennant as the price was falling when it entered the pennant. The pair also remains below the 200-day moving average which is yet another reason to be bearish.
As we have discussed before, the altcoin market has not seen maximum pain just yet. The maximum pain scenario in this market would shatter the blind optimism that we currently see in the market. The vast majority of traders is still too optimistic that we might see a new all-time high in a lot of cryptocurrencies. That is a reason in itself to think that the market may not have bottomed yet when everyone is so hopeful regarding a new bullish cycle. When the market bottomed in 2014, to most people that was the end of Bitcoin and other coins. So far, we have not seen anything like that happen but with major catalysts lining up to shape the future outlook of financial markets, it is likely that we soon might.
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