Last week the cryptocurrency market marked one of the biggest corrections since the beginning of the year. For example, the price of Bitcoin dropped from approximately €54,000 to €39,000 — a price decline of over 27%. Many cryptocurrency users, mainly newcomers, started to panic and wonder if this is a trend reversal that will lead to a new bear market. Because of that, Bloqport published some statistics showing that pullbacks in the range of -25% to -40% are not something unusual for the price of Bitcoin during bull markets:
Changpeng Zhao (CZ), founder and CEO of Binance, the world’s largest centralized crypto exchange, underlined that cryptocurrency is a long-term game for hodlers and not appropriate for short-term traders who panic during each dip:
Hashcash inventor Adam Back also brought positivity to the crypto community by highlighting the price target for Bitcoin during this bull market cycle once again, and by comparing Bitcoin with the gold market and assigning a price of approximately half a million dollars per one Bitcoin:
After the deep price correction last week, the Monday market starts with a solid price rebound. At the time of writing, according to Coin360.com, one Bitcoin costs €43,864.70 (+6.57%), one Ethereum — €2,044.26 (+12.50%), and one LINK — €28.52 (+10.33%):
Source: Coin360.com (Daily crypto market performance)
Now, let us analyze the price charts of the leading cryptocurrencies against the euro in the most noteworthy time frames.
In the daily chart (1D), BTC/EUR has dropped below the 30-day Moving Average (MA 30) and the trend line which can be considered a bearish signal:
However, we think that it is too early to say that the uptrend is over because, right now, the price of Bitcoin is consolidating at the 90-day Moving Average (MA 90) and may receive solid support and resume the uptrend. It may turn out that the uptrend is just changing its slope and trajectory in the 4-hour chart (4H):
As can be seen from the chart, at the moment, BTC/EUR is at the lower line of the potential new Ascending channel.
It is worth pointing out that for the uptrend to resume, BTC/EUR needs to exit the Descending channel (downtrend) in the 1-hour time frame first:
As can be seen from the chart, BTC/EUR is testing the upper line of the channel. If a breakout occurs, the uptrend in the 4-hour time frame will probably resume.
In the daily chart (1D), ETH/EUR continues to move forward within the Ascending channel (uptrend) — an indicator that the bulls still control the market:
The price of the cryptocurrency is receiving support from the 30-day Moving Average (MA 30). That is why we think it is worth keeping an eye on the price chart and trying to spot a favorable entry point. In our view, if the price drops to the lower line (trend line) of the channel and, after that, it rebounds, then this will be the right moment to open a long position and try to catch the next wave within the Ascending channel.
After having reached the upper line of the Ascending channel in the 1-day chart (1D), the price of Chainlink has entered a correction phase:
This correction has brought LINK/EUR to the lower line (support line) of the channel. As can be seen from the chart, at the moment, the price of Chainlink is trying to rebound from the lower line, receiving additional support from the 30-day Moving Average (MA 30) and 90-day Moving Average (MA 90).
Similar to the price chart of Bitcoin, Chainlink has formed a Descending channel (downtrend) in the 1-hour time frame because of the ongoing correction:
We think that if a breakout takes place and LINK/EUR exits the downtrend in the 1-hour chart, then a favorable moment to enter the market by opening a long position may occur. The idea behind this potential long position is to catch the next wave within the Ascending channel in the 1-day time frame.
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The analysis is purely informational and does not constitute investment, financial, trading, or any other sort of advice and you should not treat any of Bitvalex’s content as such. Bitvalex does not recommend that any cryptocurrency should be bought, sold, or held by you. You are solely responsible to conduct your own due diligence and consult an advisor before making any investment decisions.