There is some good news on the charts today.
CME Bitcoin (BTC) futures held support near $7,400 despite the sour stochastics situation (Figure 1). $8,666 and $6,300 are the other relevant levels. Right now, Bitcoin’s (BTC) technical picture is mixed.
Looking at the Ethereum (ETH) chart, support at $240 held (Figure 2). If $240 holds over the next five days, that could set up a base for Ethereum (ETH) to take off again. We have to wait and see, but the Ethereum (ETH) chart right now looks better than the chart of Bitcoin (BTC).
Finally, we do think it’s interesting that S&P futures (ES) managed to come back above the neckline of a bearish head and shoulders top formation (Figure 3). ES is trying to invalidate the bearish pattern. In our view, if equities were to stabilize, it would be stable for risky assets. That, in turn, could be stable for crypto.
Bottom Line: While the recent decline has injected some uncertainty and to the time and depth of the crypto correction. As of now, Bitcoin (BTC) and Ethereum (ETH) look on track to work off an overbought condition in an orderly manner If that doesn’t happen, a move to the mid-6000’s could occur.
Agree? Disagree? The Crypto.IQ Trading Desk has had the call on this correction.
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