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Where Are The Cryptocurrency Levels Of Support Now?

A support level is where the buyers overcame the sellers so that price reversed in direction significantly. One way of finding these spots is to examine charts on a time frame basis. You can usually identify such levels by carefully analyzing the daily, weekly and monthly graphs.

There’s nothing magical about support levels: they’re simply the places where buyers stepped in and took over from sellers. It’s likely — not guaranteed but likely — that those buyers are ready to come back in at the spot previously established. Same thing but upside down with resistance levels.

The weekly price charts yield the most useful near-term information about trend, support and resistance. Under ordinary circumstances, the week-to-week look tends to reveal, for example, where the “buy the dip” crowd is likely to show up. It’s never exact science but it’s usually close enough to be helpful.

The monthly price charts can target zones that might be needed if dramatic, unexpected events change the market tone completely. If Russian invades Ukraine or China invades Taiwan overnight, then currency, gold and oil markets might move suddenly to levels way beyond previous expectations.

Multiple sigma drops are regular features over time and have a way of happening when investors are feeling the most comfortable about positions. For the answer to the question “how far down could this sell-off really go?” you might get a decent picture from the monthly price charts.

To apply this to the cryptocurrency market, let’s start with the Bitcoin weekly chart:

That the rally is slowing down — at least, for now — is apparent on the relative strength indicator (RSI) above the price chart. You can see how each higher price high is accompanied by a lower strength reading. Below the price chart, the moving average convergence/divergence indicator (MACD) is about to give a “sell” signal for the first time in months.

The first support zone is just above the 42500 level where buyers jumped back in after some significant “red bar” selling. Below that the next support level comes in at just above 27500. These would be extraordinary moves but sometimes markets have a way of becoming extraordinary.

Here’s the Bitcoin monthly price chart:

It’s an astonishing rally that shows up as a straight series of 6 monthly bullish hollow candlesticks. Bitcoin dropped from that 65,000 peak all the way down to about 52,500 all in the same month (April). The breakout above the previous peak of 20000 (from late 2016) is a likely support zone — since massive buying interest took over right there. Below that, there’s likely support at the last monthly red candlestick which sits at about 10,000.

Here’s the Ethereum weekly price chart:

The last bout of real selling took the crypto back down to the 1300 level indicated by the first red dotted line. Just a few months previously in early 2021, buyers overtook sellers at about the 900 zone. Although an RSI divergence is apparent, the MACD indicator has yet to find a crossover.

And this is the Ethereum monthly price chart:

Once it took out the early 2018 high of about 1400, Ethereum blasted up to 2000 before trading back down to 1277. Buyers returned and since then this cryptocurrency made it all the way up to just past 2500 before selling hit again.

Those are the likely support levels for the 2 bit cryptos. It’s entirely possible that they both continue to rally above and beyond recent higher highs. Investors and traders, nevertheless, should keep in mind how quickly things can change and for the most unanticipated reasons.

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