Crypto Frontline

BTCUSD (Coinbase)

Source: TradingView

Following a disappointing start of the year, the last week has been slightly more encouraging, considering Bitcoin managed to bounce off the key support around $40k. However, the danger is not all gone, as we need to see follow-through buying in the days and weeks ahead.

A combination of oversold conditions and a weaker US dollar could be attributed to this bounce, but as we look towards next week, several conditions need to be met to see the leg extend higher. First, buyers need to break and hold above the daily 20 EMA, because it has been treated as resistance since November 2021.

Second, Bitcoin needs to break above the 200 SMA, to confirm the bearish view shifted in favor of buyers. Only if the price stays above it, should we expect more gains later on.

In case sellers resume impulsively around the 20 EMA, expect more pressure on the critical support highlighted on the chart. If it fails to cap the donwside, we believe there could be more pain ahead for Bitcoin, since it could head back towards the $30k support.

ETHUSD (Kraken)

Source: TradingView

Similar to what Bitcoin did, we can see a nice bounce-back move in Ether. However, the price action is wobbling around $3.3k, which is a resistance level and the December 4^th low. If buyers clear it out, there could be more upside unlocked in the short term. More specifically, ETH can edge towards $3.6k where another resistance is located.

Keep in mind that the bearish parabolic structure remains intact and buying at higher rates will leave bull vulnerable in case sellers resume in full force.

Although the recovery raises the short-term outlook, we continue to believe that some more weakness will follow. Ether can drop towards $2.8, where stronger support is located and that is where a move impulsive move up can start to build up. The price can’t move up in a straight line and given the recent weakness in global stocks, and strong correlation between crypto and stocks, there could be some more pain down the road.

ADAUSD (Binance)

Source: TradingView

Cardano is up around 20% over the past week, the biggest gain out of the top 10 tokens by market cap. As you can see from the chart, the price bounced once reaching the upper line of the major support area we’ve highlighted several times in the past.

The move is strong and the fact we now see the price breaking above a prior weekly high is encouraging. We would avoid getting too excited until the price break above $1.65, which is a swing high from December 27^th.

If buyers clear that and the 200 SMA, then we can assume ADA is in a structurally valid bullish move. You should watch how the sentiment evolves at the start of next week. Follow-through buying would be positive, while sluggish price action can suggest renewed weakness. Despite the good performance, we believe ADA should retest the key support once again, and only if a strong bounce occurs again, that’s when buyers can lead the order flow for longer.