Technical Weekly : Endure caterpillars if you wish to acquaint with butterflies

Key Takeaways

• Bitcoin may need further consolidations in the short-term, while signs were showing long-term bullishness in the markets.
• Sentiment was primarily remained positive after halving although the post-halving price actions could have disappointed
• Major altcoins set to test key resistance levels; however, mid/small caps may face more selling pressure.

Market Overview

The cryptocurrency markets were broadly in the red on Tuesday Asia morning, as major trading pairs have failed to break key resistance levels. The psychological 10000 levels for BTCUSDT remained tangible, while 220 levels for ETHUSDT were still undamaged. With the halving has been delivered successfully, markets seem to be continuing its search for the next focus, while major pairs may need further consolidations before starting a new trend.

Although the recent price actions may disappoint some traders, data shows that the interest of investors in the cryptocurrency as an asset class remained high. Sentix Crypto Asset Classe Sentiment Index reached an all-time high right after bitcoin halving took place. Manfred Hubner, Managing Director at Sentix, believed that the readings reflect that markets have seen many halving-driven short-term speculations. With the increasing investor interest in bitcoin, Hubner thinks it could result in price opportunities in the medium term. However, a higher Index also suggests that the price may need a renewed consolidation in the short-term.

Figure 1: Sentix Crypto Asset Class Sentiment Index    

Figure 2: BTC Balance on Exchanges

Additionally, on-chain data may also support the long-term positive outlook. Data from Glassnode shows that there was a significant outflow of BTC from exchanges, and the overall BTC balance on exchanges has almost reached a fresh one-year low.

Glassnode explained that whales could start to withdraw their holdings into cold wallets (long-term bullish), which could be one of the reasons for the balance decrease. However, the balance reduction could also implicate that investors may be disappointed in the post-halving price actions.

Elsewhere, leading altcoins traded about 2% to 4% lower in the session, with XRP gave up 2.6% value, while EOS and NEO were down about 4%. THETA has been hovering near its one-year high ahead of the Mainnet 2.0 launch. ETC watchers may want to put a close eye on the Phoenix hard fork, which is expected to happen in early June.

Price Analysis

BTCUSDT – Golden cross in the making but losing momentum?

• BTCUSDT painted a mixed picture as the pair has continued to consolidate in the lower to mid-9000 handles.
• A golden cross seems in the making, with the 50-day moving average sets to rise above the 200-day moving average in the coming days. While many traders may expect some degree of short-term bullishness after a golden cross is confirmed, we haven't seen a matching increase in trade volume.
• In contrast, the RSI has been producing some daily lower highs in the past two weeks. We considered this is a strong indication that the price may follow suit.
• At the time of writing, the pair still has been trading above its one-year trendline resistance levels. We believe that the trendline could be something traders should focus on this week, which is around 9100 to 9200. Breaking of this area could accelerate a short-term correction to the 9000 area.
• The upper level to watch could be near 9800, which seems to remain one of the major resistance areas.

Figure 3: BTCUSDT Daily Chart

ETHUSDT – Bulls set to face key resistance

• ETHUSDT has been able to close above the 200 levels for three consecutive days, and the pair may soon be able to test the April 30 high of 227.23.
• Momentum also seems able to support the bulls here, with the MACD is about to produce a bullish crossover, and the ultimate oscillator produced a bullish broke out from the recent trend.
• Besides, the Bollinger bands squeeze may indicate that the price volatility could increase shortly, and could make a breakout soon to occur.
• Levels to watch: 227, 205.

Figure 4: ETHUSDT Daily Chart

ADAUSDT – Bearish divergence increasingly evidence

• In our last edition of Technical Weekly, we covered ADAUSDT and believed that the rally was running out of steam. We want to maintain our bearish view on ADAUSDT this week.
• One of the reasons for that is we saw the momentum indicators have been disagreeing with the price. With the RSI already produced a triple bearish divergence, and the MOM indicator has already formed two major lower highs.
• On top of that, the Bollinger bands' squeeze suggests that the low volatility period may soon be over, and it’s reasonable to expect a breakout.
• Levels to watch: 0.047.

Figure 5: ADAUSDT Daily Chart

THETAUSDT – Rally momentum sustainable until network upgrade?

• THETAUSDT has been one of the best performing altcoins. The pair booked a 130% gain in the past 30 days. We believe the strong performance was mostly due to the upcoming Mainnet 2.0 upgrade.
• The question, for now, is whether traders would "sell the fact" after the upgrade was implemented.
• As the upgrade approaches, initial signs show that the current rally may have been losing momentum. With the RSI and MOM both produced some lower highs.
• Although the MACD remained positive, we believe that traders should have put high caution when opening new positions on this pair. If traders already have positions, they may consider finding an exit strategy.

Figure 6: THETAUSDT Daily Chart

Author: Cyrus Ip

Research Analyst, OKEx