After their spring plunge and summer rebound, cryptocurrencies like Bitcoin and Ethereum have been in a holding pattern for the past few weeks as investors try to decipher their next big move. Interestingly, these patterns appear to be technical patterns such as pennants and flags, which indicate a high likelihood of important moves ahead once cryptos break out from them.
After reaching a high of roughly $65,000 in April, Bitcoin then tested its $30,000 support level, and has since rebounded to just under $50,000. Bitcoin has been forming a pennant pattern in recent weeks, which indicates that another important move will occur once the cryptocurrency breaks out one way or another. A convincing break to the upside increases the chances of a re-test of the prior highs in April, while a bearish breakdown would increase the chances of a re-test of the $30,000 support level.
Litecoin has been trading in a $100 to $400 range for the past year and has been forming a pennant pattern similar to Bitcoin’s. A break to the upside would increase the chances of further bullish action, while a break to the downside could see a re-test of the $100 support level.
Ethereum has been trading in a $1,500 to $4,400 range for the past year and has been forming a wedge pattern over the past few weeks, which has similar implications as pennant patterns. A convincing breakout to the upside may indicate another attempt to reach the prior highs ($4,400), while a breakdown could see the crypto test its prior lows.
XRP has been trading in a $.4000 to $2.00 range for the past year and has been forming a wedge pattern over the past weeks. A bullish breakout could see XRP around $2 once again, while a breakdown could foreshadow a re-test of the past year’s lows.
Bitcoin Cash has been trading in a $400 to $1,600 range for the past year and has been forming a flag pattern over the past weeks.
For now, I am watching which way cryptocurrencies break out from the patterns that they have been forming over the past few weeks.