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Table of contents
- Market Heatmap and Fear and Greed Index
- US500, DXY and Gold Analysis
- USDT.D, Bitcoin and Ethereum Analysis
- Quotes / Advice
- Closing Remarks
1. Market Heatmap and Fear and Greed Index
To commence my research, I start by examining the market heatmap, providing me with a rapid overview of the entire cryptocurrency landscape.
As mentioned in the previous week, when analyzing the fear and greed index, following a couple of neutral weeks with minimal volatility, we anticipated significant market shifts.
It's evident that last week unfolded precisely as anticipated. We experienced substantial market fluctuations, but regrettably, it was a bearish week for the entire cryptocurrency market, with Bitcoin (BTC) plummeting by over 11% in the past seven days.
Furthermore, the Fear & Greed Index transitioned from Neutral to Fear, mirroring the present circumstances. Currently, we anticipate the opposite: after a few days of Fear, we are poised for bullish movements, particularly with Bitcoin and numerous altcoins nearing a support zone.
"The time to buy is when there's blood in the streets." - Baron Rothschild
Nevertheless, it's crucial to remain cautious, as there is a possibility of further decline, with the potential to test the support zone before any upward movement. Therefore, exercise prudence and avoid making impulsive decisions.
2. US500, DXY and Gold analysis
We regularly watch the US500 index to gauge overall market sentiment. This is important because the crypto market tends to move in sync with the stock market in a positive manner.
The bears maintained their dominance throughout the previous week, particularly after breaching the crucial 4400.0 support level.
Our next support is anticipated around 4200.0, as it coincides with the intersection of the previous significant high and the lower black trendline, serving as a non-horizontal support.
After dipping below last week's low of 4455, the bears have continued to exert their influence, and we are now anticipating further bearish movement towards the 4200 daily support zone.
To reignite bullish momentum and improve the overall health of the crypto market, it's crucial for a definitive breakthrough above the 4455 level to occur once more. Such a development would be a positive signal for market sentiment.
As a standard practice, we closely monitor the DXY - USD Index. This is because the value of nearly everything, including BTC/USD, is tied to the USD, making it the reference currency.
The USD index is showing a bullish trend, but it's currently in a significant rejection zone. This zone forms where the supply zone at 103.6 intersects with the upper boundary of the black channel.
To maintain bullish control, it's important for a candle to close above 103.6. If this doesn't happen, it could signal a shift towards bearish sentiment.
Here's the perspective from the H4 timeframe, indicating an overall bullish trend. For the bears to gain control, we would require a drop below the last significant low marked in blue, approximately at 102.75.
If this occurs, it could have a positive impact on the crypto market.
Conversely, the DXY would likely remain bullish, particularly if it manages to surpass the 103.6 level, as mentioned earlier on the daily timeframe.
In the case of Gold, the bears have maintained their dominance by breaking below the 1905 support level.
Consequently, we anticipate continued bearish movement towards the next support at around 1850. This support level aligns with the lower boundary of the descending brown channel.
In the short term, the trend for Gold remains bearish, unless the bulls succeed in surpassing the last significant high at 1907.
If this occurs, we can anticipate a bullish move towards the previous resistance level at 1935.
3. USDT.D, Bitcoin and Ethereum analysis
As usual, I always start my analysis with USDT.D as it serves as an indicator of traders' sentiment. USDT.D reflects whether traders are optimistic (investing in cryptocurrencies) or pessimistic (shifting towards stablecoins).
As discussed last week, complete control would shift to the bulls upon breaking above the 7.52% resistance marked in red.
At present, USDT.D is encountering a robust 8.1% resistance. Should this barrier be breached upwards, we can anticipate additional bullish momentum up to the 8.6% resistance. This scenario might not bode well for the crypto market.
To maintain bullish control, it's imperative for a breakthrough above the resistance at 8.17%, which corresponds to the previous high.
Conversely, for the bears to gain momentum and initiate a correction, a drop below the lower boundary of the resistance, approximately at 7.94%, would be a significant development to watch for.
As mentioned earlier, last week proved challenging for the crypto market, with BTC experiencing a significant drop of over 11%. Looking ahead, the next support level to watch for is around 24,200.
If this support is breached to the downside, it could indicate the potential for an extended period of market downturn and pain.
Looking at the H4 timeframe with a medium-term perspective, for the bulls to seize control and indicate a change in momentum, a breakout above the last significant high at approximately 26,600 is necessary. In this scenario, we can anticipate a move towards the 27,500 level once again.
However, until the bulls establish dominance, the prevailing bias remains bearish. If BTC drops below the previous low of 25,800, we should anticipate further bearish movement, potentially reaching the daily support range between 24,000 and 25,000.
Similar to BTC and the broader crypto market, the bears have exerted control over ETH as well, notably by breaking below the 1815.0 support level.
Currently, ETH is hovering around a robust support zone. However, if it drops below 1630.0, we should anticipate the potential for further bearish movement.
Examining the medium-term perspective on the H4 timeframe, the bulls need to achieve a breakout above the significant round number of 1700.0 to establish control.
If this occurs, we can anticipate a retest of the 1815.0 resistance level.
However, it's worth noting that ETH is expected to maintain a bearish bias, particularly if it drops below the 1630.0 level, as mentioned in the daily analysis.
4. Quotes / Advices
“The stock market is a device for transferring money from the impatient to the patient.” ~Warren Buffett
Be patient and learn to refrain from impulsive actions, particularly during volatile market periods.
Above all, avoid making blind purchases, even on massive discounts. Acquiring an asset solely because its price is declining is akin to attempting to catch a falling knife, especially in a bear market.
Always keep in mind that no matter how robust a support level appears, it can still be broken downward.
Furthermore, even if an asset is trading near its all-time low, there's still potential for it to decline further and establish new all-time lows.
5. Closing Remarks
In summary, the cryptocurrency market experienced significant fluctuations in the previous week, resulting in an overall bearish trend.
The Fear & Greed Index shifted from neutral to fear, indicating a cautious market sentiment.
In the US500 index, a bearish trend persisted after breaching a crucial support level at 4400.0. The next support is expected around 4200.0, potentially signaling a market recovery if a definitive breakthrough above the 4455 level occurs.
The DXY (USD Index) showed a bullish trend but faced a significant rejection zone. To maintain bullish control, a candle close above 103.6 is crucial, or a drop below 102.75 could shift sentiment.
Gold experienced a bearish trend, breaking below the 1905 support level. Further bearish movement is anticipated towards the next support at 1850, unless a bullish breakout occurs above 1907.
USDT.D reflects trader sentiment and is currently challenging strong resistance levels.
Bitcoin (BTC) faced a substantial drop and might test support around 24,200. A bullish reversal necessitates breaking above 26,600.
Ethereum (ETH) also saw bearish movement, breaking support at 1815.0. A bullish reversal requires breaching 1700.0.
Overall, the analysis underscores a cautious market sentiment in cryptocurrencies with potential for both bullish and bearish movements. Traders are urged to exercise caution and monitor key support and resistance levels closely.
