Short-Term Market Sentiment Goes From Bullish to Bearish – Analysis, 22 Nov
During the past week, the short-term market sentiment started to change from bullish to bearish. The price of Bitcoin has dropped from approximately €57,000 to €51,000. Ethereum, the second-biggest cryptocurrency by market cap, has recorded a decent price pullback as well: its price has dropped below the psychological level of €4,000 to approximately €3,500.
Although the market is experiencing a deep correction, most financial experts remain bullish. For example, Christopher Waller, a member of the Federal Reserve Board of Governors, compared Bitcoin with an electronic gold during a discussion with the U.S. Center for Financial Stability:
In an interview on CNBC, MicroStrategy founder and CEO Michael Saylor clarified that the current market volatility is because of excessive leverage on crypto exchanges. The Bitcoin bull underlined that inflation is going mainstream, and that's why the price of BTC will go up forever as more people will stack the digital gold as a hedge against inflation.
During the weekend, the President of El Salvador Nayib Bukele announced that the country would issue the first-ever sovereign Bitcoin bonds and build a Bitcoin City:
El Salvador will try to raise $1B in tokenized bonds on the Liquid Network, built and maintained by Blockstream. The sum comprises two items worth $500 million each - Bitcoin allocation and infrastructure spend for building out energy and Bitcoin mining infrastructure in the region.
Although a couple of positive news appeared in the second half of last week, the bears continue to put pressure on the crypto market. According to Coin360.com, one Bitcoin costs €50,914.40 (-2.44%), one Ethereum – €3,731.81 (-3.23%), one DOGE – €0.1918 (-3.93%), and one UNI – €18.85 (-1.77%):
Source: Coin360.com (Daily crypto market performance)
Now, let us analyze the price charts of the top cryptocurrencies against the euro in the most noteworthy time frames.
In the weekly chart (1W), BTC/EUR formed a Bearish Engulfing (common trend reversal pattern):
According to the technical analysis theory, a Bearish Engulfing is a chart pattern that signals lower prices to come; despite that, we think that it is too early to talk about trend reversal. However, one thing is clear: the bulls have to be very cautious. Unless a bullish signal that invalidates the bearish signal occurs, it is better to remain in wait-and-see mode.
Interestingly, in the daily time frame (1D), the bullish sentiment remains in place. BTC/EUR continues to move within the Ascending channel (uptrend):
Because there are sequences of higher local lows and higher local highs, respectively, we also remain bullish and expect an uptrend renewal at some later point in time.
Similar to the price chart of Bitcoin, in the weekly time frame (1W), ETH/EUR formed a Bearish Engulfing:
Even though it is a typical trend reversal chart pattern, we would like to remind you that in the daily chart (1D), we've also been waiting for a buy signal based on the Cup and Handle (C&H) technical pattern:
As can be seen from the chart, the price of Ethereum has retraced to the upper line of the C&H. If the price receives enough support, rebounds, and surpasses the last local high, then a buy signal will occur. In this case, we may open a long position.
If we draw a line through the last local lows in the daily chart (1D) of DOGE/EUR, we will receive a trend line heading upwards:
It means that the uptrend remains in place. However, as can be seen from the chart, the price is currently testing the trend line. That's why it is better to remain in wait-and-see mode for now.
In addition, the daily time frame (1D) continues to be neutral: DOGE/EUR is moving sideways at the 30-day Moving Average (MA 30) and the 90-day Moving Average (MA 90):
As long as a clear bullish signal is absent, we will stay away from the market.
In the weekly chart (1W), UNI/EUR has formed a bearish candlestick after the sequence of Spinning Tops:
That is an indication that the bears are trying to take control of the market.
Moreover, in the 1-hour chart (1H), the price of Uniswap has dropped below the lower line of the Ascending channel:
Because, at the moment, there are mainly bearish signals in the different time frames of UNI/EUR, we will stay away from the market.
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