The compression Continues, Making Us Wait

News • 2021/05/31 • par

Bitcoin / US Dollar

The compression trend continues to bring more pressure in the current situation, making the price move around $37,000. This level was familiar in the Bitcoin market as the same situation appeared in early January 2021, when the market was trying to continue its bullish outlook. That compression trend had found a resistance point around $40,000 while it corrected afterward at $30,000 point, which was the goal for Bitcoin by the end of 2020.

A similar scenario might replicate this time also as the price seems to move weak in the next trend, without being able to establish a separate move from the rest of the market and lead it to the next level. If this scenario will follow the same path, we expect that the price will try to reach $40,000 and then correct back to the compression trend at $37,000, before reaching the $30,000 support level.

This scenario could break up if there is a decisive move above the $40,000 point that will mark the next bullish period. The next bullish point above $40,000, is the $47,000 point, which was the entry point for Tesla’s purchase. Regarding the $30,000 support level, we should highlight that this point was the entrance point for many institutional investors that will want to defend their position, with possible more purchases.

The trading volumes have remained on the normal levels while the moving averages are converging to each other, creating the background for the next bullish period.

In the short-term diagram, the compression trend is much more evident within the last weeks. The last 2 weeks have put more pressure on the market, showing that there might be a decisive move on either side.

Indicators
MACD index has passed on the positive side, showing that this could be a turning point in the market momentum and the first signal that the market will pass on the other side. The RSI index lays between 35 and 40, indicating that there is a possibility for a further downtrend.

Ethereum/ US Dollar

The price rebounded today at $2,600, bringing the compression trend around this price that expands between $2,800 and $2,200. This compression trend has made the market stay at a previous level, which was familiar in it. The $2,600 served as the resistance point before the market tries to break any limit in the bullish era and reach levels above $4,000.

If the compression continues to converge in a single point, we expect that the move that will follow the market might be negative as the compression will make the market correct in a downtrend. On the other hand, if the compression has an expanding vibe, we believe that the $2,800 upper compression limit will not be enough to hold the next trend.

The high correlation between Bitcoin and Ethereum shows that a move in one market might be enough to drag the other market in an uptrend move. The next steps in the Ethereum market will include the full launch of Ethereum 2.0 and the pass in the Proof-of-Stake era, with considerable impact on the price formation.

The trading volumes have remained at higher than normal levels, showing that investors are not willing to abolish their positions in the market after reaching all-time high levels. The moving averages are also converging to each other, sending positive vibes for the next trend formation.

Indicators

MACD index remained in the negative area, bringing less momentum than expected in the price formation process. On the other hand, the RSI index moved to value = 45, indicating that the price will remain on the same levels but with negative vibes around this situation.

Ripple/ US Dollar

The crucial point around $1.00 has become the epicenter of attention during the last period for Ripple, as it seems to be the most crucial point that will determine the next direction in the market.

As we can see in the diagram below, the $1.00 point was the first break-out point for Ripple’s price as it climbed in the high levels and acted as the psychological barrier between the bears and the bulls. The last period shows us that the market can make certain implications when there is a need.

This was evident when the market hit a bottom around $0.80 and rebounded at $1.00 after a few days. This fact shows that there is a difference between past and present Ripple investors that will act more rationally and with less excitement about their next moves.

The bullish reaction will be more unpredictable as the recovery will lead to another price exploration mode with more surprises to be met in the short-term future. On the other hand, the bearish approach will lead the market to meet the lower levels for 2020, around $0.20 - $0.30.
The trading volumes have remained on the same levels for now while the moving averages have sustained the same space between them, indicating that there is no change in the perspective for the next period.

Indicators

MACD index grows day by day but has remained on the negative side, showing that the market has no momentum to gain from the current situation. The RSI index moved to value = 45, showing that the market will remain on the same levels but with a negative perspective for the next period.

Litecoin / US Dollar

Litecoin seems to have less power to grow in the current field than any other coin. The price remained around $180, which depicts a stronger compression in the market formation. This stronger compression will end up in the next established trend in the market. As we can see in the diagram below, the boundaries of this compression trend (established from the previous period) lay at $200 and $125 respectively.

Any break of the abovementioned points will make the market follow this direction even stronger as the investors will follow this trend more heavily. The chances are that Litecoin will be closer in the $200 line so a bullish expectation is more possible in this situation.
The trading volumes have remained at higher levels than before. The moving averages have remained in the same space, showing certain stability in the market.

Indicators

MACD index moved to a positive area without reaching it, showing the positive background in the market formation. The RSI index moved around value = 40, meaning that the market has moved to more stable levels, without losing its negative perspective.

Bitcoin Cash / US Dollar

The compression moved in the $700 line, which is the level below the critical space between $700 and $800. This space implements a certain level of stability for the market but it needs to be reached for starting this scenario. The weak reaction of Bitcoin Cash, even under the compression situation, shows that the asset will probably have a slower adaptation process when there would be a strong move in the market that will bring the next trend.

We expect that the $550 support level won’t be reached soon while the $800 resistance will be the crucial point for entering another bullish cycle. The trading volumes have remained at higher levels than before while the moving averages have been far away from each other to cross.

Indicators

MACD index is still in the negative area, bringing no momentum in the price formation while the RSI index moved between values 40 and 45, prescribing a stable outcome for the next period.

Correlations

Bitcoin / Ethereum = 0.98 (+ 0.04), Bitcoin / Ripple = 0.84 (+ 0.04), Bitcoin / Litecoin = 0.97 ( 0 ), Bitcoin / Bitcoin Cash = 0.98 (+ 0.01)
The situation in the market looks more integrated than ever, determining that every single asset seems to be pegged in Bitcoin’s trend. The majority of the largest altcoins (Ethereum, Litecoin, and Bitcoin Cash) have made almost a perfect correlation with
Bitcoin, showing that the market will try to make a move as a whole, to overcome any resistance issues on the way. On the other end, Ripple will probably follow the major trend that will be established but in a milder way. In any case, we expect a move that will bring the market in the same status for every coin in the next trending period.