Konstantin Anissimov, Executive Director at CEX.IO:
Since August 2nd, Bitcoin entered a consolidation phase that saw its price make a series of higher lows. However, the infamous $12,000 hurdle continued to hold, absorbing any upward pressure. This price behavior led to the formation of an ascending triangle on BTC’s 4-hour chart.
Consistent with this technical pattern’s characteristics, a horizontal trendline was created along with the swing highs while a rising trendline formed along with the swing lows. As the overhead resistance became weaker over time, the flagship cryptocurrency was poised to break out in an upward direction.
On Monday, August 17th, this happened. Bitcoin kicked off the day on a negative posture after being rejected by the $12,000 barrier. Its price plunged from a high of $11,921.32 to hit an intraday low of $11,780 by 2:00 UTC. But as buy orders began to pile up, it was evident that BTC was bound for a major price movement.
Around noon, the pioneer cryptocurrency took another aim at the x-axis of the triangle. One hour later, this supply wall could not hold any longer, allowing Bitcoin to surge and achieve its upside potential. Prices shot up over 5% to reach a new yearly high of nearly $12,500.
Although this price hurdle was able to hold igniting a 1.63% correction that saw BTC close the day at $12,298.06, the ascending triangle formation estimates prices are bound to advance further. By measuring the distance between the two highest points of this continuation pattern, it forecast that Bitcoin could rise towards $14,000.
Ethereum Hits New Yearly Highs But Posts Negative Daily Returns
Investors seem to be growing overwhelmingly bullish around the upcoming Ethereum 2.0 upgrade. Given the boom in DeFi tokens, speculation is mounting around ETH’s potential to become the “world’s computer.” This sense of optimism can be seen in the number of positive ETH-related mentions across multiple social media networks, which recently reached a new all-time high.
Even though increased levels of attention around a particular cryptocurrency is not necessarily a positive sign, it appears that Ether’s price is currently benefiting from the clout. On Monday, August 17th, the smart contracts giant was able to hit a new yearly high of $449, but getting there was not easy.
The second-largest cryptocurrency by market capitalization opened the week at a high of $434.19. Nonetheless, it quickly entered a downward trend that saw its price plummet by more than 3% to hit an intraday low of $421.01. This support level seems to have been filled with a significant number of buy orders that allowed Ethereum to rebound.
From that point on, ETH entered an uptrend, rising by 6.65% on value slicing through the previous yearly high of $445.66 to make a new one of $449. Investors seem to have taken advantage of the surging prices to realize profits, which cause Ethereum to retrace towards the end of the day. The substantial spike in selling pressure pushed prices down by 4%, and Ether closed at $431.31, providing a daily return of 0.66%.
On the Cusp of a New Bullish Cycle
The recent price action by the top two cryptocurrencies by market capitalization suggests that a new bull market has begun. Although Bitcoin has yet to make a higher high by breaking above June 2019’s level of $14,000, everything seems to indicate that it is headed that way. Given the critical moment where the cryptocurrency market sits, market participants seem to be growing “extremely greedy.”
In the past, when “greed” reigned on the market, steep corrections followed. Therefore, it is imperative to be cautious when trading in this market and implement a strict risk management strategy. The idea behind it is to protect the investment capital in order to “buy the dip” in the event of a downturn.
