Issue 33 – Crunch Time for Ethereum

July 7, 2021


I don’t often peg the direction of a market on a single level. However, I’m willing to make an exception in the case of Ethereum.

There’s an ETHUSD trend line that dates back to November of last year that is paramount for altcoins.

As long as the market falters at this level, the entire crypto market will remain stagnant and vulnerable.

I’ll illustrate the level I’m referring to and what it could mean for the entire market over the next few weeks in today’s issue. We’ll then finish up with some charts, including the S&P 500, BTC, VET, ADA, and more.

Let’s begin!


Ethereum’s Predicament

The recent correction from cryptos did significant technical damage. But, of course, that probably goes without saying.

Several markets fell below key levels, including the number one altcoin by market cap.

I haven’t seen anyone talking about this trend line on ETHUSD, but it’s single-handedly holding the market down.

ETHUSD (daily time frame)

The trend line above served as support for Ethereum since November of last year. We have touch points in December and also the May 23rd selloff.

But on June 21st, ETHUSD closed below that level on a daily closing basis.

Those of you who read Tuesday’s issue know how helpful the daily close at 8 pm EST can be when analyzing a market.

ETH has struggled to get back above it since the June 21st close below the November 2020 trend line.

It tried on June 30th and again on July 4th. It’s even trying again today.

However, so far, ETH bulls have yet to reclaim a daily close above the trend line near $2,430. That’s the key for Ethereum and the rest of the altcoin market to move higher.

Until then, expect cryptos to struggle.

Last but not least, there’s also a short-term trend line support near $2,300. If that level fails, we could see ETHUSD rotate lower to test $2,000 and perhaps even $1,700.

The terminality of this pattern suggests a break one way or the other by July 10th at the latest.

S&P 500

I’ve mentioned it several times on Twitter recently, but it’s worth discussing the S&P 500 again.

Cryptos aren’t all that correlated to stocks unless they’re pulling back.

The S&P 500 is far from pulling back at the moment with its recent consecutive all-time highs. However, it’s also incredibly overextended.

In fact, the last time it was this far above its 100-week moving average was July 1998. It was 32% above the MA then. It’s 28% above it now.

That doesn’t mean stocks will revert to their mean tomorrow or next week, as the market could drift higher for weeks or even months.

But the risk is there. And if you’re looking for asymmetric long bets, US stocks aren’t it, in my opinion.

When the S&P 500 decides to start respecting gravity again, it will most likely drag cryptos down with it.

Of course, trying to time such a correction is the tricky part.

S&P 500 (daily time frame)

Total Crypto Market Cap (TOTAL)

The crypto market cap is holding below the $1.47T resistance level but above $1.4T support.

It’s the perfect illustration of how indecisive the crypto market has been over the last 50 days.

If buyers can clear the $1.47T level on a daily closing basis, we could see the market turn higher toward the $1.5T to $1.6T area.

That’s the intersection of the trend line from June 23rd and the larger one from May 20th.

It will then take a daily close above that region to open the door to higher prices, such as $1.7T or $1.8T.

Alternatively, a close below trend line support near $1.4T would signal weakness and expose the $1.2T region.

Total crypto market cap (daily time frame)

Bitcoin (BTCUSDT)

Bitcoin is also sitting on key support just above $34,000. That’s the location of the trend line from the June 22nd low.

A close below that would open up the must-hold support at $30,000. As I’ve mentioned recently, a close below $30,000 would be the technical catalyst for a move toward $24,000 to $25,000.

On the flip side, a close above the $35,000 to $36,000 region would open the door to the range ceiling at $40,000. That area also intersects with the late June trend line at $39,000.

BTCUSDT (daily time frame)

Cardano (ADAUSDT)

ADA broke free from a trend line I mentioned a few weeks ago near $1.35. You can see where the market closed above that level on June 29th and then caught a bid there over the next few days.

However, this rally, like most others, isn’t very convincing.

Cardano continues to struggle below $1.50 and has been mostly sideways since July 4th.

Unless buyers can begin to carve higher highs (above $1.60) and higher lows, I’m not ready to rule out another leg lower.

A close below the $1.40 area would likely send ADAUSD to retest some recent lows near $1.28 and even set up another run at the $1 region.

ADAUSDT (4-hour time frame)

VeChain (VETUSDT)

VET is nearing the end of a terminal pattern. Resistance is near $0.086, while support is $0.0825.

A breakout one way or the other could (finally) trigger some direction for VETUSDT.

However, don’t forget about volume. It’s low now, but we’ll need to see it pick up during a breakout to help determine the market’s conviction level.

Any breakout on low volume is more likely to fail.

Above $0.086 is $0.093, followed by $0.12. Alternatively, a close below $0.0825 would open up the $0.06 area.

VETUSDT (4-hour time frame)

THORChain (RUNEUSD)

RUNE is an interesting one. The market broke above the May trend line on Tuesday. However, the market has yet to carve its first higher high.

There’s also a trend line resistance from the May 23rd low that buyers have to get through. That level is near $7.70.

A daily close above that $7.70 area would open the door to the mid-June high just below $11.

Alternatively, a close below the $6 support area would signal weakness. It may even open up the October 2019 channel support around $4.

RUNEUSD (daily time frame)

Wootrade (WOOUSDT)

WOO continues to drift higher within a massive triangle pattern.

However, the more immediate levels include $0.75 resistance and $0.65 support.

A close above $0.75 would likely expose the top of the multi-month triangle just below $1.

On the other hand, weakness below the late-May trend line near $0.65 would expose $0.53 and potentially trigger another retest of triangle support just above $0.30.

WOOUSDT (daily time frame)

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Justin Bennett

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About the Author

I'm Justin Bennett, a currency trader turned crypto enthusiast. My journey started with stocks in 2002. After limited success, I transitioned to currencies in 2007, which later became a full time trading gig. The journey continued, and in 2020, I committed to learning about cryptocurrencies. It was love at first sight. Cryptocademy.com is the culmination of my love for cryptocurrencies, my passion for financial markets, and desire to learn and teach.

  1. Hey Justin, thanks for the insights. I was looking at the ethereum chart and just tried to shift your trendlines sightly. Looks like it is has tagged the bottom or came close to tagging the bottom of the channel if that blow out was not true blowout of the top but just the top of the channel.
    Just a thought.
    Try draw the parallel from the top of the feb/March 20 price to that recent peak.

    Thanks for your mentorship.

    James

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