Crypto Frontline

BTCUSD (Coinbase)

The Bitcoin bullish parabolic move continued to extend impulsively during the holiday and with thin liquidity, valuations were pushed beyond $30,000 and are now trading around $34,500. Looking at the magnitude of the move, most of us are left stunned, but this is what it is and we need to deal with the current market conditions.

Parabolic structures can lead to powerful rallies, but at the same time, when the market reverses course, the counter-trend move is aggressive. At this point, long-term buyers should wait on the sidelines for a stronger pullback.

If sellers start to gain control, the areas to watch are $28,250, the daily 20 EMA, and the psychological area around $25,000. Timing is difficult but we suspect Bitcoin will start a major corrective move within the next few weeks.

One of the reasons supporting such theory is the extreme reading currently posted by the daily RSI, which is trading close to 90 for the first time since mid-2019. As it happened then, the parabolic structure failed to extend higher and Bitcoin entered a corrective phase lasting around 8 months.

ETHUSD (Kraken)

Ether broke the channel we’ve talked about last time and continued to push higher, managing to break above $800 for the first time since April 2018. The next resistance levels buyers should be aware of are located near $850 and $900. Outperformance in Bitcoin is driving flows to large altcoins as well, but since we suspect BTC is overextended and gains won’t come at the same pace indefinitely, a similar scenario should be applied to ETH.

On the downside, support should be found around the 4h chart 20 EMA and $750. In case the price will enter the channel again, then the 4h chart 200 SMA and the bottom of the structure will be next in line. Longer-term, the upside in Ether remains intact, even though a corrective structure is becoming increasingly likely.

ADAUSD (Binance)

Cardano buyers continue to hold the upper hand and squeeze the price action higher. The token price reached 20 cents several days ago, but the reaction from the sellers is rather muted since buying resumed around the daily 20 EMA.

In case we will continue to see new higher highs, that will be an indication for an extension higher, with the mid-term resistance area located around 25 cents. Breaking below the 20 EMA will open more room for sellers, considering the price could weaken towards the 200 SMA. Stronger support is expected there and only if we see a major breakout below, should we start thinking about a longer correction.

Also, as one of the major altcoins, Cardano continues to trail behind Bitcoin or Ether and in case investors will start rotating, this is one of the attractive coins they might be interested in. Broad market weakness can pause the rally and create some challenges for buyers in the short run, but we think the upside momentum can continue to extend higher over the next several months.