Last week in Weekly Opportunities In Cryptocurrency: Did We Just Bottom?, I suggested that a bottom could be imminent or had bottomed. I often look to our bellwethers, Bitcoin, and Ethereum as signals for the larger crypto market.
I wanted to see $7085 hold in Bitcoin and $495 in Ethereum. On May 28, Bitcoin hit $7075, a nominal break and Ethereum $505. So far those levels have held and we appear to have setup bullishly.
As long as they do, we have a very bullish setup- the five wave pattern off the April lows, which suggests this wave ii we believe bottomed proceeds a larger third wave rally.
Attached are six hour charts which show the expected extent of the coming rally if these levels hold.
This morning, let's take a look at the five minute chart again for an update. We have traced a 'micro' five wave pattern off those lows. Note how the third wave properly extended upward, a strong sign an impulse may have started.
In both charts we have a series of 'nested two's as we call them- A wave 2, and a minor wave ii. Both suggest a third wave will start soon.
Both are holding nice fibonacci levels. I now want to see $7185 hold in Bitcoin, and $523 in Ethereum. Both of these are levels of last resort, and higher would be better. So far, so good. If these levels hold, we should see the third of 1 of our larger third begin very soon.
Note the greenline on my charts. This is a key level on both, where we retrace .618 of the drop from the May highs. If impulsive over those levels, $8720 in Bitcoin and $685 in Ethereum, we'll have the strongest confirmation we can have without a direct breakout.
I currently consider sentiment very doubtful to apathetic. The apathetic holder feels shocked that they've seen such a drawdown but feels trapped and certainly doesn't have the money to buy more. The doubtful believes Bitcoin is in a large scale correction and will remain in it for many months.
One trader I follow, called for a 1.5 year correction. Some analysts I watch are calling for Bitcoin to go below $5000.
While I can see that price level possible, I cannot see it as probable at this time. Granted if the key levels I'm watching, and call out above, break, I will look down. And, those levels are quite tight to price here so we have early warning.
It seems anecdotally we have sentiment conditions ripe for a larger rally to begin but price must prove.
In short, so far price has held over the bottoms struck on May 28. We are now tracking nominally higher support levels in both Ethereum and Bitcoin to serve as early warning of failure.
As long as support levels hold we see the next degree third wave as ready to start.