Bitcoin
Bitcoin saw a high volume break of the $15500 support that I mentioned yesterday, and has seen a strong rejection of both the 61.8% support of the local trend and 38.2% support of the longer term bull run. A sharp fall like this is often followed by an equally sharp retrace before continuing its decent. I would watch for a bearish continuation pattern such as an ascending wedge on lower time frames. Until we see a confirmation of the direction (e.g. an ascending wedge or a strong double bottom) I would wait to open a position, as shorts can often get stopped out towards the top of a strong bounce.
If we see a bearish continuation pattern, then the first key level to watch would be the recent support around $14192, which also coincides with the longer term 38.2% support. It is possible that this could be the neckline for a small head and shoulders pattern if the current bounce pulls back to the $15500 level, however that is currently just hypothetical.
The next big support would be around $12700, which coincides with the 50% long term support. Past this, $12000 - $11150 would likely be the last region before a major capitulation and possibly a long term bear market. This level also intersects the upper bound of the ascending channel that Bitcoin spent most of 2017 in.
Ethereum
ETH managed to push to just above the 1.618 target level before sharply retracing, as expected.
There was an extremely strong bounce from the retrace, indicating that there is still strength left in this market. We may see a retest of the high around $1230, but if we do we will likely form a double top, as we can see a bit of bearish divergence on the MACD. While I don't see much bearish action for Ethereum in the medium term, I wouldn't be surprised if we see a bit more of a dip and consolidation.
The ETHBTC ratio also pushed higher and saw a similar retrace to its USD counterpart. We are currently nearing levels of historical resistance, so this kind of pullback is to be expected. What should be watched for is particularly sharp rejections of resistance levels, as this can indicate a weakness in the bull trend. As I shall repeat ad nauseam, for an investor or swing trader consolidation is your friend. It may not make for interesting day trading or huge short term gains, but all trends need to consolidate and good consolidation will make way for stronger bullish action in the future.
Bitcoin Cash
We are still within the consolidation zone here, sitting just above the 61.8% support. BCH is currently following Bitcoin's USD movements pretty closely, which would imply that it could follow any further bearish action on BTCUSD. However, I'm inclined to say that BCH would instead decouple from BTCUSD and stay within its consolidation zone rather than see much bearish action, causing a rise on the BCHBTC ratio.
This is consistent with the current pattern on BCHBTC, which is now sitting above the 61.8% support. The ratio is looking increasingly bullish, so a dip in Bitcoin would make a good place for Bitcoin Cash to decouple from Bitcoin price action, and potentially continue the BCH bull run.
