Bitcoin, Ethereum Set Up for Potential Rebound

Financial Insane

Jul. 11, 2022

The top two cryptocurrencies look primed to bounce back after finding support.

Bitcoin, Ethereum Set Up for Potential Rebound

Shutterstock image by Have a nice day Photo (edited by Mariia Kozyr)

Key Takeaways

Bitcoin and Ethereum dropped by over 10% in the last three days.
Both cryptocurrencies now present buy signals on their four-hour charts.
A spike in buying pressure could push BTC to $21,500 and ETH to $1,200.

Bitcoin and Ethereum appear to be trading in oversold territory after incurring more than 10% losses over the past three days.

Bitcoin and Ethereum Present Buy Signals

Bitcoin and Ethereum kicked off Monday in a negative posture, but momentum may be building for a significant rebound.

The flagship cryptocurrency has retraced nearly 10% after getting rejected by its 200-hour moving average on the four-hour chart. It went from trading at a high of $22,490 on Jul. 8 to touching a low of $20,350 early Monday morning. Bitcoin’s 100-hour moving average is now acting as stable support, which could prevent it from dipping further.

The formation of a buy signal per the Tom DeMark (TD) Sequential indicator supports this optimistic outlook. The bullish formation developed as a red nine candlestick, which is indicative of a one to four candlestick upswing. If Bitcoin can hold above $20,450, it could gain the strength to rebound toward $20,900 or even $21,500.

Bitcoin price dollar chart — *BTC/USD four-hour chart. (Source: TradingView)*

Likewise, Ethereum also appears to be trading in oversold territory after experiencing an 11% correction in the same period. The second-largest cryptocurrency by market capitalization has seen its price drop from $1,275 to $1,135 within the last three days. However, like Bitcoin, there are some signs suggesting that a rebound is underway.

The TD Sequential also presented a buy signal in the form of a red nine candlestick on ETH’s four-hour chart. A sustained candlestick close above $1,160 could help validate this bullish formation. If this were to happen, Ethereum could surge toward its 200-hour moving average at around $1,200.

Ethereum price chart — *ETH/USD four-hour chart. (Source: TradingView)*

Although the odds currently appear to favor the bulls, monitoring the price of Bitcoin and Ethereum as trading volumes continue trending down is imperative. A breach of BTC’s $20,450 support level could trigger a downswing to $20,000 or $19,375 for the top cryptocurrency. Meanwhile, ETH could drop to $1,050 if it losses $1,127 as support.

Disclosure: At the time of writing, the author of this piece owned BTC and ETH.

Disclaimer