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Another Chance to Short as Crypto Market Dips
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Bitcoin bears take back control
Bitcoin (BTC) kicked off last week with a bullish run up to USD4,100. After a period of tight sideways price action between USD3,860 and USD4,100, Bitcoin was unable to find adequate support and fell back to the USD3,600 range.
In late-December, a bounce off the 0.618 level was followed by a bullish move up to the 0.236 level at USD3,980.
In traditional technical analysis, the 0.618 retracement level is often considered the maximum pullback zone before a chartist would consider a significant change in trend.
If BTC is unable to hold this level, and instead retraces further to the 0.768 Fibonacci level in the USD3,370 range, another move down to the lower 3,000s is likely.
While the 4-hour chart still maintains a hint of bullish sentiment (support at the 0.618 retracement level), the daily chart is decidedly bearish.
As you can see in the image above, Bitcoin was unable to sufficiently break through the 0.236 level highlighted in green. Even worse, BTC printed a lower high and was unable to continue its previous trend of making higher lows.
This suggests the bears are currently fully in control and that we may retest USD3,100 if there are no fundamental catalysts to draw the bulls back.
Ethereum hits a roadblock
This week ETH’s upward momentum hit a roadblock at USD158, and price action followed BTC with a 33% drop back down to the USD114 area.
The drop was followed by a large bullish candle up to the 0.5 Fibonacci level. At the moment, ETH has found a temporary support level at the 0.382 level.
ETH’s 4-hour chart is looking slightly more bullish than that of BTC, which broke through the 0.618 level on the 4-hour timeframe.
As you can see in the image below, ETH has found temporary support before the 0.618 level. For the time being, ETH has experienced a series of heavy rejections at the 0.5 level on the 4-hour chart.
XRP looks even more bearish
Out of the top three, XRP has exhibited the most bearish properties. XRP’s 1-hour chart is similar to ETH’s, except XRP was only able to reach the 0.382 level before finding temporary support at the 0.236 level.
XRP is occasionally a leading indicator for the rest of the cryptocurrency market. While it’s uncertain if that is the case this time around, it’s interesting to see a relatively deeper retrace, to the 0.768 level, on XRP’s 4-hour chart.
As we progress into the first month of 2019, things are looking fairly bearish for the cryptocurrency market.
With high time frame charts retracing to 0.618, 0.5, and 0.768 levels in the top three majors, it’s clear that the bears are firmly in control for the time being.