The founder of Latin Stake Pools, Martín Ungar recently released his summary of technical analysis for the Bitcoin and ADA cryptocurrencies in their relationship with the dollar. Taking as reference the data provided by Index and Binance, respectively, based on one of the most popular indicators such as moving averages.
BTC/USD:INDEX
According to the Index indicator, the cryptocurrency Bitcoin (BTC) in the course of the month of January 2023 experienced a significant rallywhich reveals that this first month of the year will close at +40%, ranking it as “the best month of January since 2013”, when the digital currency bitcoin closed the month at that time with a rise of +51%.
However, according to Ungar, there are still doubts about the minimum market value of BTC for last November 21, when it set its minimum mark at $15,473 BTC/USD. Even though, many of the technical indicators signaled that it was a good time to buy, such as hash ribbons; there were also some indicators that did not give convincing signs.
By January 12, bitcoin broke above the 21-week moving average with a +5% candle and also broke above the 200-day moving average with another +5% candle for January 13. The fact of having managed to exceed both moving averages for two consecutive days and with candlesticks of +5%, according to the analyst, is a sign of strength for the digital currency.
It should be noted that the aforementioned moving averages (21 weeks and 200 days) are support in a bull market and resistance in a bear market.
Technical analysis reflects that despite bitcoin breaking above the 21-week moving average on November 4, the cryptocurrency could not hold its own, crashing on November 7. Previously, by March 27, 2022, bitcoin breaks above the 21-week MA, but fails to break above the 200-day moving average and breaks the April 7 support. These examples reflect that the events that occurred on January 12 and 13 are not minor to these, they stand out from Latin Stake Pools.
The next thing for the digital currency BTC, would be the “fireproof”, this test is the 50 and 200 week moving averages. The second test (200 weeks), mainly, is distinguished by being a very long-term moving average, which in December 2018 turned out to be the support of the market floor.
However, in the analysis they mention that this average was broken in March 2020, bitcoin recovered quickly due to the Covid 19 pandemic. Then, by June 2022, the cryptocurrency “breaks down” the support of this moving average . While, July and August are distinguished by being a battle between buyers with a bullish trend (bulls) and sellers with a bearish trend (bears), with the bears winning on August 19 with a -10% candle.
Since then, bitcoin has been unable to rise and is now sitting at $24,834 BTC/USD at the time of writing.
death crossroads
This crossover occurs when a short-term moving average falls below a long-term moving average. Therefore, in this case, the moving averages of 50 and 200 weeks are very close to the death cross in the market, this means that the prices of the last 50 weeks are lower than in the last 200 weeks. This fact confirms the bear market that has been in place since November 2021 in the cryptocurrency ecosystem.
However, it is important to note that this moving average crossover is more important since it is the first time in 14 years that it has occurred on the bitcoin chart.
“Historically, looking at other assets and indices, asset prices often rally after a death cross. Product of being a lagging signal”, highlights the founder of Latin Stake Pools, Martín Ungar.
He also indicated that, Whether or not a rally occurs after the death cross, the fact is that the $24-$25K BTC/USD area is a major resistance area due to the history of both moving averages. Both moving averages are long-term resistances that have not yet been overcome.
From all this a question arises: if this rally will manage to continue and overcome this resistance zone. For this, a good indicator to find the answer to the question is the volume, which was rising from the first day of January and remained until the 12th. It was not until January 14, when the Volume was consistently declining, which could be a sign that the rally is losing steam.
ADA/USD:BINANCE
Regarding the case of Cardano (ADA), the expert indicates that his scheme has a structure very similar to that of bitcoin but “its general situation is very different.”
Cardano (ADA) has experienced a rally during the first month of the year 2023, just like the cryptocurrency bitcoin. However, there is a very marked difference between the two currencies, and that is that ADA has not yet been able to overcome the 200-day moving average at $0.395 ADA/USD. Although it has been able to exceed the average of 21 weeks. Which is considered very relevant, due to the history of battles lost with this resistance since November 2021.
death crossroads
For this digital currency, the 50-week and 200-week moving average crossing occurred on January 2. From that moment to its maximum of $0.399 ADA/USD on January 29, 27 days have elapsed and an appreciation of almost 60%.
Latin Stake Pools explains how the Fibonacci Retracement technical indicator uses the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…) to find key support and resistance levels. on the chart of a crypto asset. He points out that it can be graphed from minimum to maximum or from maximum to minimum but always from left to right. The image shows is plotted from the March 2020 low to the September 2021 high.
In addition, detail that a key support zone was the 0.382 Fibonacci level at $0.432 ADA/USD in which the price remained for much of 2022 and it was controlling it on various occasions from May to October, when it finally managed to break support. Level that has now become an area of great resistance.
symmetrical triangle
Cardano (ADA) formed a symmetrical triangle with a target of $0.128 ADA/USD, this happened while ADA was testing the 0.382 Fibonacci level for much of 2022. This target also coincides with another Fibonacci level, the 0.618 at $0.126 ADA/USD.
The analyst made reference to the fact that the objective of a symmetrical triangle is found by first calculating the amplitude of the triangle. “In this case, the high of the candle of May 31, 2022 at $0.688 and subtracting the low of the candle of May 12, 2022 at $0.384. This gives us a result of $0.304 which corresponds to the width of the triangle” he explained, indicating that the subsequent task is to find the price at which the formation breaks and subtract the amplitude to find the target.
Also He recalled that technical analysis is not an exact science and that different people will identify different formations and may even calculate different targets for the same formation.
“In this case I take the price of $0.432 ADA/USD as the triangle breakout point, which gives me the target of $0.128 ADA/USD. This formation and objective can be invalidated at any time, but I personally believe that they are still in play ”he emphasized.
The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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