Bitcoin, Ethereum Outlook: Short-Term Correction Or Has The Bubble Burst?

The cryptocurrency market has come under fire in recent days, with Bitcoin and Ethereum both sinking lower as a wave of risk aversion sweeps across global financial markets. Although the longer-term outlook for both cryptocurrencies remains skewed to the topside, further losses look likely in the coming days. Here are the key technical levels to watch for BTC and ETH in the weeks ahead.

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Bitcoin (BTC) Weekly Chart - Hanging Man Candle Hints At Further Downside

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Bitcoin weekly chart created using Tradingview

Bitcoin’s staggering 949% surge from the March 2020 appears to be running out of steam, as price begins to form a bearish Hanging Man reversal candle just shy of key resistance at the 200% Fibonacci expansion (42673).

With the RSI notably U-turning at its highest weekly overbought readings since 2013, and prices tracking substantially above the 8-week exponential moving average (28108), a more extensive pullback looks likely in the near term.

Failing to gain a firm foothold above last week’s close (38200) would probably open the door for sellers to drive prices back towards psychological support at $30,000. Clearing that may pave the way for a push back towards former resistance-turned-support at the 2017 high (19891).

On the other hand, a weekly close above the 200% Fibonacci could signal the resumption of the primary uptrend and generate an impulsive topside push to challenge the $50,000 mark.

Bitcoin (BTC) Daily Chart – RSI Signals Swelling Bearish Momentum

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Bitcoin daily chart created using Tradingview

Zooming into a daily chart reinforces the relatively bearish outlook depicted on the weekly timeframe, at least in the near term, as prices slip back below the 8-day EMA (36318) and $35,000 mark.

With the RSI plunging back below 70, and the MACD eyeing a bearish cross below its ‘slower’ signal line counterpart, the path of least resistance seems skewed to the downside.

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