Crypto Frontline

BTCUSD (Coinbase)

Bitcoin is testing the daily 20 EMA at the start of this week, but we can’t say yet that the sentiment has shifted to bullish. The US Dollar and yields are under pressure, which is usually positive for risk assets, yet buyers continue to be reluctant.

This week we have new important data coming from the US and that could set the tone. If the price breaks and holds above the 20 EMA and the short-term trend line on our chart, that could be the signal for a continuation higher. In that scenario, we might see BTC edging towards $120k. 

But we want to caution traders by saying this is a period marked by poor seasonality, so a jump in price might be followed by strong selling interest. A break below $108k will be bearish and in that case, we would expect Bitcoin to weaken towards the $100k area. The daily 200 SMA is another critical support to watch in that zone. 

What matters most this week is the inflation data from the US. Higher-than-expected readings could have a negative impact on crypto and stocks as financial conditions will start tightening again. 

ETHUSD (Kraken)

Even though the price had the opportunity to jump off the trend line several times, that didn’t happen and ETH continues to be choppy. The 20 EMA also doesn’t seem to attract strong buyers, which is why we suspect the market might need to weaken further. 

We are now below the bullish trend line and a short-term bearish trend line has already emerged. This points to a weakening momentum and for that matter, we should not be surprised if Ether weakens towards the $4,000 area. That’s an important support and buyers should treat it as an opportunity to take more risk. 

On the upside, we want to see a break above $4,500 to be confident that a new leg up has started. Anything less than that is just a corrective move within a downside leg. The RSI also doesn’t show any sign of improvement in momentum. 

LTCUSD (Coinbase)

Litecoin is consolidating inside a triangle pattern and the structure has been almost completely filled. The direction of the break will determine the next direction, but be wary of fakeouts in this market. 

A break and close on a daily basis below the bottom line would be bearish and then we would expect LTC to weaken towards the $98 key support zone. On the flip side, if buyers push the price above the triangle impulsively, we expect an extension at least towards $120. 

Even though this consolidation comes after a push higher, we can’t ignore the weakening momentum. If buyers were strong, the price should continue its upward path. For that, we give a slight edge to sellers based on current conditions, but since LTC is still consolidating, all options are on the table. 

We could see weakness first and buyers stopped out on the dip, followed by renewed bullish sentiment in October, when flows favor the crypto space.