Regardless of the optimism surrounding Bitcoin’s halving, the cryptocurrency market is showing multiple bearish signs.
- Bitcoin sits in a no-trade zone marked by the $8,600 support and $9,170 resistance level.
- Ethereum is contained within a parallel channel suggesting a move down to its the lower boundary.
- XRP sits on top of massive support that appears to be weakening over time.
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Market sentiment is overwhelmingly bullish about the Bitcoin halving, but technical indicators show that BTC is due for a correction. Given the price correlation between major cryptocurrencies, Bitcoin’s next move will set the stage for Ethereum and XRP.
Bitcoin Sits at Critical Price Junction
Over the last two months, the TD sequential indicator has been quite accurate at anticipating when Bitcoin is bound for a bearish impulse. In mid-February, for instance, it presented a sell signal in the form of a green nine candlestick that was followed by a 62% correction. Then, this technical index provided a similar bearish outlook on Mar. 26 and Apr. 8 as BTC was reaching overbought territory.
After these sell signals were given, the flagship cryptocurrency dropped nearly 13% and 12.5%, respectively.
The TD setup formed another green nine candlestick at the beginning of the month, suggesting that Bitcoin was poised to correct. While some of the most prominent analysts in the industry have talked about the likelihood of a bearish scenario, BTC has still failed to retrace. Instead, it continues consolidating within a narrow trading range.
This consolidation area is defined by the lower and upper Bollinger bands that sit between $8,600 and $9,170. As the Bollinger bands squeeze on BTC’s 4-hour chart, it builds momentum for a period of high volatility.
The unpredictability of the market, especially now that the halving is just a few days away, makes it impossible to determine the direction of the breakout. Therefore, the trading range between $8,600 and $9,170 is a reasonable no-trade zone.
A daily candlestick close below support or above resistance will confirm where the bellwether cryptocurrency is headed next.
A spike in sell orders behind Bitcoin may allow it to break below support, which would likely validate the pessimistic view that the TD index forecasted. The downward pressure can send the pioneer cryptocurrency towards the next levels of support represented by the 78.6% and 61.8% Fibonacci retracement levels.
These demand barriers sit at $8,300 and $7,400, respectively.
Nevertheless, a bullish impulse above the overhead resistance at $9,170 could catapult Bitcoin towards higher highs. Under such circumstances, the critical supply levels to watch out are BTC’s recent high of nearly $9,500 and the 127.2% Fibonacci retracement level at $10,900.
Ethereum Is Breaking Below Support
Ether’s price action has been contained within an ascending parallel channel ever since the March market meltdown.
Consistent with the characteristics of a channel, each time ETH rises to the upper boundary of the channel, it drops down to hit the lower boundary, and from this point, it bounces back up again.
Following the recent rejection from the overhead resistance, Ethereum retraced over 11% and is now trading around the middle of the parallel channel. An increase in supply around this area could push the smart contracts giant further down to the lower boundary of this technical pattern.
On the 4-hour chart, Ethereum can be seen breaking below the 50-four-hour moving average, which adds credence to the bearish outlook. If the selling volume continues rising, Ether may retest the 100-four-hour moving average for support. This is where the bottom of the aforementioned parallel channel sits.
Failing to hold above this key support barrier could be catastrophic for the smart contracts token as it suggests a steeper decline. The next level of support below this area sits at around $178.
Even though Ether seems ready for another leg down, the optimistic outlook cannot be omitted due to the irrationality of the crypto market. An increase in demand for ETH that allows it to regain the 50-four-hour moving average could signal a retest of the upper boundary of the channel.
XRP Develops Sell Signals
As in the case of Bitcoin, the TD sequential indicator has been quite precise at estimating XRP’s price slumps. This technical index was able to predict the correction that began in early April by presenting a sell signal in the form of a green nine candlestick. Following the bearish formation, this altcoin pulled back more than 14%.
Now, the TD setup has given two consecutive sell signals on XRP’s 1-day chart. The first one developed in the form of a green nine candlestick and the second one as an aggressive 13 candlestick. The combination of the two increases the expected odds of a retracement.
XRP’s 4-hour chart reveals that the 50-four-hour exponential moving average is currently acting as strong support. However, if this key resistance level fails to hold, the cross-border remittances token could aim to test the 100 or 200-four-hour exponential moving averages. These areas of support sit at $0.205 and $0.198, respectively.
It is worth mentioning that a spike in the buying pressure behind Ripple’s native token could put the pessimistic forecast in jeopardy. If so, an important resistance level to pay attention to lies around $0.23. A candlestick close above this area might propel XRP towards $0.27.
Overall Crypto Market Sentiment
Google searches for the keyword “bitcoin halving” are hitting all-time highs. Likewise, the chatter around this topic is dominating the airtime on social media and cryptocurrency-focused publications, based on data from The TIE.
The optimism around this event can even be seen within the Crypto Fear and Greed Index, which recently moved away from sensing “extreme fear” among market participants.
Regardless of investors’ sentiment, the flagship cryptocurrency seems bound for a correction from a technical perspective. Such a bearish impulse in BTC may be able to bring the entire market down with it.
As emotions continue to run high in proximity to the halving, it is important to wait for confirmation before entering trades. Patience under the current market conditions will be key to avoid adverse market conditions.
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