BTC Bulls Target $21,000 as ETH Breaks Down Resistance at $1,500

Key Insights:

• A breakout Tuesday session saw bitcoin (BTC) and ethereum (ETH) return to $20,000 and $1,500.
• A shift in market sentiment towards the Fed delivered the breakout session, with economic indicators showing cracks in the US economy.
• The technical indicators have turned bullish, with the momentum supporting a bullish Wednesday morning.

On Tuesday, bitcoin (BTC) rallied by 3.95%. Reversing a 1.25% fall from Monday, BTC ended the day at $20,104. Notably, BTC wrapped up the day at $20,000 for the first time since October 5 while also avoiding sub-$19,000 for a fourth session.

A bearish morning saw BTC fall to a late morning low of $19,251. However, steering clear of the First Major Support Level (S1) at $19,138, BTC surged to a late afternoon high of $20,432. BTC broke through the Major Resistance Levels. However, a late pullback saw BTC fall through the Third Major Resistance Level (R3) at $20,258.

Ethereum (ETH) surged by 8.63% on Tuesday. Reversing a 1.47% loss from Monday, ETH ended the day at $1,460. Notably, ETH visited $1,500 for the first time since mid-September.

A mixed start to the day saw ETH fall to an early low of $1,335. Steering clear of the First Major Support Level (S1) at $1,322, ETH jumped to a late afternoon high of $1,525. ETH broke through the day’s Major Resistance Levels. Late in the day, the Third Major Resistance Level (R3) at $1,440 delivered support.

On Tuesday, US economic indicators fueled bets of a less hawkish Fed policy move in December. Last Friday, a Wall Street Journal report and FOMC member Mary Daly talked of the Fed taking its foot off the gas.

This week, economic indicators have shown the effects of Fed policy on the economy. Prelim private sector PMIs for October showed a more marked contraction in the services sector, with consumer confidence also taking a hit.

The impact of the rise in interest rates on mortgage rates also hit the housing market, with house price growth slowing markedly.

Today, there are no material stats for the markets to consider. However, with FOMC members in the blackout period until November 3, members are unable to change the narrative, supporting the bullish morning session.

This morning, the FedWatch Tool had the probability of November and December rate hikes at 95.1% and 47.9%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 77.0%.

Other driving forces behind the rally include Elon Musk’s plans to complete the Twitter (TWTR) acquisition and reports of CFTC Chairman Rostin Behnam labeling BTC and ETH as commodities.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 3.25% to $20,757. A bullish morning saw BTC rally from an early low of $20,077 to a high of $20,757.

BTC broke through the First Major Resistance Level (R1) at $20,607.

Technical Indicators

BTC needs to hold above R1 and the $19,929 pivot to target $21,000 and the Second Major Resistance Level (R1) at $21,110. A BTC move to $20,800 would signal an extended breakout session. However, US housing sector data would need to support the prospects of a Fed pivot.

In the case of an extended rally, BTC would likely test resistance at $21,500 before any pullback. The Third Major Resistance Level (R3) sits at $22,291.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $19,426 into play. Barring an extended sell-off, BTC should avoid sub-$19,000 and the Second Major Support Level (S2) at $18,748.

The Third Major Support Level (S3) sits at $17,567.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 200-day EMA, currently at $19,543.

The 50-day EMA closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA to deliver bullish signals.

A bullish cross of the 50-day EMA through the 200-day EMA would support a move through R2 ($21,110) to target $21,500. However, a fall through the 200-day ($19,543) and the 50-day ($19,494) EMAs would bring S1 ($19,426) and the 100-day EMA ($19,426) into play.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 5.90% to $1,546. A bullish morning saw ETH rally from an early low of $1,457 to a high of $1,558.

ETH broke through the First Major Resistance Level (R1) at $1,545.

Technical Indicators

ETH needs to hold above R1 and the $1,440 pivot to target $1,600 and the Second Major Resistance Level (R2) at $1,630. However, ETH would need crypto-friendly US economic indicators and support from the broader market to bring $1,600 into view.

In the event of an extended rally, the Second Major Resistance Level (R2) at $1,630 and resistance at $1,650 would likely cap the upside. The Third Major Resistance Level (R3) sits at $1,820.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $1,355 into play. However, barring another crypto sell-off, ETH should avoid sub-$1,300 and the Second Major Support Level (S2) at $1,250.

The Third Major Support Level (S3) sits at $1,060.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 50-day EMA, currently at $1,355. The 50-day EMA converged on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 200-day EMA would signal an extended rally. However, an ETH fall through S1 ($1,355), the 200-day EMA ($1,355), and the 50-day EMA ($1,355) would bring the 100-day EMA ($1,337) into view.