I didn't do an update yesterday morning, I was going to do it later but then bitcoin decided to dump so that kept me busy tending to my portfolio. Okay, I probably still could have done an update but was also a little lazy.
Well, looking at the 4-hour chart you can see that bitcoin did make it back up to resistance but was rejected once again. Bitcoin then proceeded to drop back down to the trendline which did act as support again, bitcoin bounced from there up to the 7 EMA but lost momentum and dropped back down to the trendline again. This time there was just too much bearish momentum and bitcoin pushed right through the support. Once this happened there was a very fast drop to just under $54k, that is where BTC found support and bounced. There is another trendline created by two higher lows (circled) and that seems to have provided enough support to stop the decline at least temporarily.
Over the last 20 hours, bitcoin has been mainly trending sideways and still remains below all of the moving averages. At this time it is still too early to tell if bitcoin is going to push higher or head back down. If bitcoin does start dropping lower again I will watch for support again at the new trendline, we could possibly see bitcoin form a double bottom. If the trendline support fails I really don't want to see bitcoin drop below the low set on the 4th, that in my opinion would break the slight uptrend bitcoin has been in since bouncing from the low set on April 25th. It could also signal the beginning of a longer downtrend. I don't believe that it would be a severe drop but it could take bitcoin back down to near the bottom of the consolidation box, or at a minimum near the $50k level.
Bitcoin 4-hour Chart
Bitcoin Daily Chart
Looking at the daily chart we can see that bitcoin is still very much caught in this consolidation phase. Bitcoin could still go either way, I could see it heading back up to resistance again or dropping down towards the bottom of the pattern. As I am writing this bitcoin has started working its way through the moving averages so that is sort of a positive development. But bitcoin could still roll over if it can't overcome the multiple levels of resistance that now stand between it and the upper resistance / $60k level.
Overall, in my opinion, even with the drop yesterday not too much has changed. Bitcoin remains in consolidation, which I believe could go on for at least several more weeks. And as a result, bitcoins market dominance continues to drop as altcoins are surging higher while BTC moves sideways.
Ethereum Daily Chart
Looking at the Ethereum daily chart we can see another example of just how strong ETH has been lately. Ethereum has easily recovered and now sits above all of the moving averages pretty much on all time frames but the smallest. I was watching ETH closely during the drop yesterday and was very impressed by how quickly it was able to recover. It was very obvious that there were many buyers just waiting for a dip to open a position or add to an existing position. Both indicators remain extremely bullish looking and really not much else to add other than ETH continues to lead this market.
So to sum it all up, the market is in a recovery mode after yesterday's drop and looking better so far this morning however it is still early and too soon to know if the recovery will continue or if there is more downside to come. Because bitcoin is still consolidating I will be watching ETH closely for any signs of which way the market will be moving in the short term.