These are the key support levels bitcoin and ether need to hold to prevent further downside, technical analyst says
- The recent decline in
bitcoinand etheris putting key technical support levels into focus.
- Detailed below are the key levels the cryptocurrencies have to hold to prevent further downside, according to Katie Stockton of Fairlead Strategies.
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Fairlead Strategies outlined the key support levels traders should be watching for bitcoin and ether.
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According to Stockton, short-term momentum in bitcoin has weakened, and key resistance for the digital coin is now set at $60,000. Meanwhile, strong support for bitcoin can be found around the $42,000 level, which was successfully tested over the weekend. That support level coincides with a fibonacci retracement level and will soon coincide with bitcoin's rising 200-day moving average."While this [$42,000] would be a natural place for bitcoin to hold, there are no signs of intermediate-term downside exhaustion yet," Stockton explained, adding that a breakdown below that support level "would put next support near $34,000."
A decline to $34,000 represents potential downside of 23% from current levels. Stockton believes an oversold buy signal likely won't form in bitcoin until early June, and emphasized that long-term momentum is still positive for bitcoin despite its weak intermediate-term momentum, "favoring a bullish bias beyond the corrective phase."Ether has a different technical set up than bitcoin, as it was staging a parabolic surge in late April and May as bitcoin was moving lower. "The magnitude of [ether's] pullback shows the risk inherent to parabolic rallies, during which support levels are left well behind," Stockton explained. Ether's support level now stands around $2,038 according to Stockton, which represents potential downside of 40% from current levels.
"We expect the pullback [in ether] to deepen in the near term, after which a consolidation phase may keep hold for a month or two within the context of the long-term uptrend," Stockton said.
As traders look to buy the dip in cryptocurrencies, keeping an eye on these key technical support levels outlined by Stockton could prove to be a helpful guide.Read more: 'Wolf of All Streets' crypto trader Scott Melker breaks down his strategy for making money using 'HODLing' and 100X trade opportunities - and shares 5 under-the-radar tokens he thinks could explode
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