After a strong start to the week Bitcoin is now teetering on several significant inflection points, even with down days on Wednesday and Thursday. On a weekly timeframe we’re anticipating a potential breakout before the weekly close this Sunday night that has the potential to wipe out the negative trend that has been intact since Bitcoin’s all-time high in November 2021.
One encouraging sign for BTC going towards the end of the week is that while still waiting to clear the downtrend on a weekly time frame, it has already had 2 consecutive closes above the downtrend on a daily time frame.
Even after bumping into resistance at the $20,500 level BTC still looks to be maintaining the $20,000 level as well as the 50-day moving average as support for another leg up. If BTC can overcome $20,500, look for confirmation with a daily close over $21,600 which would present further upside to as high as $24,450 in the event of a powerful short-term breakout.
As we approach the end of this week it will also be worth continuing to keep an eye on the total cryptocurrency market cap which is attempting to put in a long-term double bottom with a higher low on the weekly time frame as well as the potential to retake the 200-week moving average.
The Ethereum vs. Bitcoin ratio has gone sideways over the past 2 weeks which indicates that there has been no evidence of either outperforming the other, however, there is definitely more relative upside in trading ETH rather than BTC in the event of a breakout.
If Ethereum can take out the $1,420 level as well as the 50-day moving average then there is room to run as high as $1,720 without hitting any other major resistance. Underlying momentum according to the RealMotion indicator has regained its 200-day moving average and is now bumping into resistance at its 50-dma. If RealMotion takes out the 50-dma on a closing basis then a breakout is imminent.
Although the Displayed Ranking table looks pretty much the same as last week, it is likely to change very soon. Chainlink is still the only top coin that has a positive Trend Strength (TSI), but Polygon (MATIC) and Uniswap (UNI) are both on the brink of going green as well.
We’ve mentioned MATIC pretty continuously for most of 2022 and have already seen a Polygon position in our CryptoPulse Quant that hit 80% profit targets in the July rally. Thanks to an abundance of positive news lately MATIC has been drifting higher towards the top of its trading range than most other cryptocurrencies, and if the coin can break out it realistically has the ability for a 2x move in price.
MATIC has clear resistance at its 200-day moving average as well as at the $0.93 level, but a break above these could lead to a run as high as the $1.60 range. Polygon is likely to continue leading the crypto market and you can expect it to be one of the strongest movers if things can continue to improve into the end of the week.
Uniswap isn’t far behind Polygon according to the TSI rankings which isn’t surprising given how similar their charts look.
UNI looks like a buy with a daily close over the 200-day moving average which would signal a likely run to as high as $9.28, a roughly 40% run.
The reason that this report is more optimistic than last week is because of the continued outperformance of cryptocurrencies over other risk assets into this week even amidst drama surrounding several major global currencies.
Even with major news regarding the Binance network getting hacked and potentially exploited for hundreds of millions on Thursday night, crypto prices barely even batted an eye.
Hopefully we’ll see a strong Friday rally to close the regular trading week and see strong continuation in crypto markets through Sunday night. This week’s candle is a pretty important one.