Bitcoin is preparing for a next leg above $69K, while Ethereum is aiming for $4K as key trading levels are set
Bitcoin and Ethereum are both facing significant resistance and potential profit-taking due to overbought conditions. Bitcoin started the week with positive momentum but faced selling pressure after attempting to break $69,000, dropping to $59,000 and losing momentum. Ethereum outperformed, aiming for $4,000 despite resistance at $3,975. Both cryptocurrencies face critical resistance and potential profit-taking due to overbought conditions.
Bitcoin saw a sharp reversal after a bounce early last week, but managed to maintain its upward momentum as large investors saw the week's lows as a buying opportunity. After the volatility at the start of the week, the crypto saw its trading zone rise above $65,000. The resistance at the $ 69,000 limit in the 2024 trend this week attracted attention, indicating a meaningful reaction according to Fibonacci levels. If this price is broken in the coming days with daily closes or hourly volume purchases, the cryptocurrency's new ATH level will be in the $74,000 band, corresponding to Fib 4,236.
On the daily chart, the Stochastic RSI indicator also started to signal a correction with a loss of momentum from the sideways trend in the second half of last week. In order for the assumption that the correction occurred quickly in Tuesday's pullback to be valid, it is extremely important for Bitcoin to step into the $ 69,000 band. If this rise occurs, we will see that the Stochastic RSI will also turn up again and give a bullish signal.
The rising channel movement on the hourly chart also points to similar price targets for Bitcoin. The trading range narrowed after the volatility at the beginning of the week, while the cryptocurrency finally encountered resistance at the midline of the short-term rising channel. Selling from this resistance, which corresponds to an average of $67,600, has continued to find support in the lower band of the channel for the last 48 hours. This outlook points to an ascending triangle with a price squeeze that could take Bitcoin to the $70,000 area, coinciding with the midline of the channel.
If these supports are lost in a possible pullback, we could see a test of the trend line up to the $59,000-$60,500 range. Ethereum first broke its medium-term ascending channel upwards in February and then, in the shorter term, it accelerated its rise by moving above the channel it continued by increasing its momentum.
Currently, the world's second-largest cryptocurrency is in the process of testing resistance at $3,975 ahead of $4,000. This price level corresponds to Fib 0.786 according to the last peak and bottom price, marking a critical point. If Ethereum can see a weekly close in the region of $ 4,000 above this value in the coming days, the next move is likely to be towards the record level of $ 4,800. However, there may be fatigue on the buyer side of the cryptocurrency, which has been rising steeply for the last 5 weeks.
In March, three stocks with the potential for a short squeeze were identified
1. Novavax – 41.58% short interest: This pharma stock has seen a 53% increase in value over the month due to its narrow revenue pipeline resulting from its heavy focus on COVID-19 vaccines. The company's earnings report for Q4 2023 reported a 50% decrease in revenue, from $1.98 billion in 2022 to $984 million. In May 2023, Novavax urged governments to deliver on their existing contracts, including $2.1 billion in advanced purchase agreements into 2025. With negative earnings per share for full-year 2023 at $5.41, Novavax attracted a large pool of short sellers, currently having 41.58% of the float shorted.
2. Beyond Meat Inc. – 38.25% short interest: This company focuses on displacing meat products with simulacrums and has experienced consecutive quarterly drains since Q2 2020. In the latest Q3 2023 earnings report, Beyond Meat reported an 8.7% year-over-year decrease in revenue to $75.3 million, providing another net income loss of $70.5 million. France may be setting a trend where plant-based products cannot use meat labels for marketing purposes.
3. MicroCloud Hologram Inc. – 62.98% short interest: This China-based company should be considered highly speculative vaporware, as it has yet to deliver a single annual report despite being founded in 2020. The company announced a holographic virtual digital human, adopting the ChatGPT pre-training model, in September 2023, which investors took as riding the AI hype, resulting in a high short float at 62.98%.
HOLO's short interest ratio based on MarketBeat data is 0.815 with 0.1 days to cover (as of February 15th), indicating high volatility that could trigger a short squeeze as a contrarian indicator.
The Euro is currently in a holding pattern before the ECB decision
The European Central Bank (ECB) is expected to hold the deposit rate at 4.0% for a fourth straight time, following the Federal Reserve's pause. The CPI is down to 2.6%, but core CPI is at 3.1% and service inflation is running around 4%. Inflation is on a downtrend, but the battle to bring down inflation to the ECB's 2% target is not over. ECB members have been saying that there is no rush to lower rates, with markets pricing in 90 points in cuts for 2024, with a first cut expected in June.
The ECB will likely hold rates again today, focusing on the central bank's economic outlook. The ECB is expected to revise lower its inflation forecast, and ECB President Lagarde will likely address the inflation outlook in her press conference. Federal Reserve Chair Powell's testimony on Capitol Hill did not give any hints about the timing of a rate cut, but said that the Fed would carefully monitor data and the economic outlook before making any moves.
Powell signaled that rates have likely peaked, and the Fed's rate path will likely remain in a holding pattern of “higher for longer” until the Fed sees clear evidence of inflation subdued. The markets have priced in three rate cuts this year, with June the likely date for the initial cut.
