Bitcoin Breaking Key Resistance

In my last post on Monday I was looking at the bull and bear scenarios on the big three coins that I cover, with particular focus on the strongest setup on Bitcoin (BTCUSD). I was also noting the similar setup on equity indices at the same inflection point, which is important as both Crypto and equity indices have tended to be significantly correlated in the past, and there is no current sign that is different here.

Since then both Crypto and equity indices have rallied strongly and are both reached yesterday the verge of a final break up that would look for retests of many of their all time highs.

In the last hour Bitcoin has now broken over last week’s high at 102.7k and, as I was explaining on Monday, that is the right shoulder high on the H&S that had broken down. The break up has invalidated that H&S and fixed a target at the retest of the all time high at 108.4k.

That ATH retest isn’t the only possible option here of course. This could potentially be wave B of an ABC bullish consolidation and we could therefore see a lower low before (most likely) that high retest, but my lean is that Bitcoin is likely to head to the ATH retest directly.

BTCUSD daily chart:

On the hourly chart Monday’s possible double bottom has now played out to the extended target and the fixed hourly RSI 14 sell signal is warning of a possible retracement in the short term.

BTCUSD 60min chart:

On Solana (SOLUSD) a good quality double top had broken down with a target in the 145 area. The bull scenario was a break over possible bull flag wedge resistance and that has broken up over the last day. Double tops don’t have fail levels like H&S patterns but, in the overall context, I am assuming that the double top has failed as this bull flag has broken up with a target at a retest of the all time high at 264.52, and would note that there is a larger possible double bottom here with resistance at 223.16. A sustained break over 223.16 would fix another target at a retest of the all time high.

SOLUSD daily chart:

On the hourly chart I would note that there is also a possible hourly RSI 14 sell signal is brewing, and that we may see a retracement or consolidation in the near future.

SOLUSD 60min chart:

Ethereum (ETHUSD) has been slower off the lows, which isn’t unusual. An IHS on Ethereum had broken down with a target in the 2100 area and a break over the right shoulder high at 3745.42 would invalidate the H&S and fix a target at the retest of the 2024 high at 4109.05.

Ethereum is still breaking back over the daily middle band, but looking at Bitcoin and Solana, Ethereum will likely break up as well.

ETHUSD daily chart:

On the hourly chart I have drawn in a decent quality possible bull flag setup on Ethereum and a break over flag resistance, currently in the 3555 area, would again fix a target at the retest of the 2024 high at 4109.05.

ETHUSD 60min chart:

Altogether I am very much liking the odds of new all time highs on Bitcoin and Solana, and a new high over the 2024 high high on Ethereum. The bull setup on equity indices also looks very promising so we’ll see how that goes.

On the bigger picture I am leaning towards a retracement / consolidation on Crypto in the first half of 2025 and then strong new all time highs with a very possible bull market high pencilled in close to the end of the year. That scenario would be a good match with past Crypto bull markets. Everyone have a great weekend. :-)

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The Obvious Point of Failure

In my last post yesterday I was looking at the big inflection points in the current rally on US equity indices that could take SPX and QQQ, and perhaps also DIA and IWM, to retests of their late 2024 all time highs.

The first inflection point in this process was at the Monday’s lows and key support, and they rallied there.

The second inflection point was after the initial rallies, and they pushed through to the upside there.

The third inflection point we reached this morning, and if we are to see this move fail hard, then this is the most likely remaining place to see that. Equally, if bulls push through this, on SPX there is a clear path to the all time high retest and that would likely be made.

In my premarket video this morning I was looking at the setup here but I wanted to do a post as well because these posts are a nice little example series examining in detail how a reversal like this works.

The good quality IHS that I was looking at yesterday on SPX broke up and has come very close to target. Hourly RSI 14 and RSI 5 sell signals were brewing at the close yesterday and fixed this morning, with the RSI 5 sell signal having now also made target this morning. A retracement or consolidation was likely and is now in progress.

On the bull scenario this is a bullish consolidation acting as a springboard to higher highs. On the bear scenario this is the start of a hard fail before lower lows.

SPX 15min chart:

The good quality IHS that I was looking at yesterday on QQQ broke up and has come very close to target. Hourly RSI 14 and RSI 5 sell signals were brewing at the close yesterday and fixed this morning, with the RSI 5 sell signal having now also made target this morning. A retracement or consolidation was likely and is now in progress. So far this is almost identical to SPX.

On the bigger picture QQQ is testing the daily middle band, but the key resistance as I noted yesterday is the bull flag resistance now in the 522.25 area. A sustained break over that level fixes a target at a retest of the all time high.

QQQ 15min chart:

The moderate quality IHS that I was looking at yesterday on DIA broke up and has reached target. Hourly RSI 14 and RSI 5 sell signals were brewing at the close yesterday and fixed this morning, with the RSI 5 sell signal having now also made target this morning. A retracement or consolidation was likely and is now in progress. So far this is similar to SPX. I’m noting that these three indices are moving strongly in sync here as that strengthens the setup here.

On the bigger picture DIA broke back hard over the daily middle band and has come close to the key resistance level I was looking at at 433.67. This is possible asymmetric double bottom resistance and a sustained break above would look for a target range 446-9, putting DIA within striking distance of the all time high retest at 450.25.

DIA 15min chart:

On the SPX hourly chart the weak RSI 14 buy signal I was looking at yesterday has made the possible near miss target and that could be it. An RSI 5 sell signal fixed this morning.

Beyond key resistance at the daily middle band the other, less important but still significant, levels on the SPX to be broken to clear the way to a retest of the all time high are possible bull flag resistance, currently in the 5990 area, and the H&S right shoulder high at 6049.75. Breaks above those each would individually fix a target at a retest of the all time high. They are less significant as if SPX can convert the daily middle band to support, then both of the others will likely break in turn after that.

SPX 60min chart:

The resistance level I have been watching with most interest in the SPX daily middle band. SPX failed there on the last two rallies and it is this level that really needs to be broken and converted to support to open the all time high retest.

If you look at the last two rallies that failed at the daily middle band you can see that the first of those, in late December to 6049.75, broke back above the middle band, retraced to backtest and close on it the next day, then failed hard. That’s normal as a break over (or under) the middle band that fails will generally do so the next day or (a bit less often) the day after that. The second rally in early January to 6021.04 only broke over the daily middle band intraday and failed to close above either day. The current instance is more like the first rally. A fail at the daily middle band like this will usually open a move back to the daily lower band, currently at 5796 and not a good place to return to for bulls here.

The challenge for the bulls at this obvious potential point of failure is to keep this retracement relatively modest and in the form of a bullish consolidation. The 15min RSI 14 sell signals would ideally reached their target by early afternoon and SPX would ideally close again today above the daily middle band, currently at 5927.27 and still declining, and then hold it again tomorrow. If we see that then the odds of a retest of the all time high are good in my view.

SPX daily chart:

I’m leaning towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. Whichever way this breaks would be fine for that scenario. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities. The last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch.

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