The fall of Bitcoin and ether below last month's lows indicates that cracks have appeared in the multi-week rally. So far, cryptocurrencies have held above key support levels, but the downside risks are unlikely to dissipate unless the upward momentum picks up.

Bitcoin: Consolidation within the uptrend

The broad trend in BTC/USD remains bullish despite recent consolidation, as shown by the colorful candlestick chart based on trend/momentum indicators (first highlighted in January - "Bitcoin Technical Outlook: BTC/USD turns bullish," January release 18).

Importantly, Bitcoin has remained above the key buffer around 25,300-26,000 (including the 89-day moving average and the February 2023 high). See the previous update, which highlighted the risk of moving lower "Bitcoin and Ethereum price action: Is the rally over? Published May 8.

To be fair, the recent holding of support does not guarantee that the correction is over. Unless the psychological 30000 is broken decisively, it is not ruled out to retest the 25300-26000 region.

ETHEREUM: The early May highs were an insurmountable barrier

Like Bitcoin, the overall outlook for ETH/USD has been bullish. However, ETH/USD closed last week below the horizontal trendline support level around 1780, indicating that upward pressure is subsiding. Nevertheless, it remains above the February high of 1710-1740 (including the 89-day moving average).

A break below 1710-1740 could expose downside risks, pointing to the 200-day moving average (currently around 1560). On the bright side, to subside the upward pressure, ETH/USD needs to break above the May 6, 2019 high.

Note: In the color-coded candlestick chart above, the blue candle represents the bullish phase. The red candle represents the bearish phase. Grey candles are used as consolidation phases (in bullish or bearish phases), but sometimes they tend to form at the end of a trend. Note: Candle colors are not predictive - they simply indicate what the current trend is. In fact, the candle color may change in the next column line. Error patterns can occur near the 200-cycle moving average or around support/resistance and/or sideways/choppy markets. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Users of the information do so at their own risk.