3Sigma Markets – Crypto Report May 27th, 2021

The heavy selling in Crypto markets last week has led to a consolidation in Bitcoin around the $40,000 area. The consolidation may be part of a corrective pullback in Crypto as the rally over the last few months is rolled back. Crypto has been subject to extreme pullbacks in the past but these have ultimately resolved to the upside. There has been considerable volatility in crypto in recent weeks but the range has normalized somewhat over the last few days. Developments in the space have slowed also and this has allowed price to find support and considerable buying interest at $30,000 where weak hands have passed onto stronger long term players. Gold has benefited from the pullback and it is gaining ground and trading around $1900.00. Gold suffered from the rise in popularity of crypto in recent months. However there is no reason to prevent gold becoming a catalyst for crypto to move back higher and for both assets to offer each other mutual support. The crypto space has also been affected by crackdowns around the globe and plans by governments to make the space more accountable and transparent particularly in China.


The selloff from $64,000 fell into the important $30,000 support zone and retraced up to the $42,000 area last week before consolidating around $40,000. This is now a key area for buyers to hold and price is now trading back around $38,200 as it attempts to reverse the selloff. Support for today comes into focus at $36,650 and buyers should emerge to support price action in that region ahead of $30,000. A loss of the $30,000 level may result in a move down to $27,000 followed by $25,000. Alternatively if buyers can regain $43,000, the path to $45,000 opens up and may lead on to a test on $47,000 as the April low followed by the $50,000 level. A breakout higher may see price consolidate between $50,000 and $60,000 before attempting to break to new highs.


Ethereum found support around the 1755.00 area last week and staged a recovery to currently trade around 2743.00 This crypto traded higher to the 2915.00 level ahead of resistance at 3000.00. A break above this area targets the former higher low at 3120.00 followed by the 3550.00 area. A break above this zone may open the way to 4000.00 and the high at 4373.00. Alternatively if sellers re-emerge, support may be seen around 2500.00 followed by 2200.00 and 2000.00. A loss of these levels opens the way to a test on the 1920.00 area followed by the higher low at 1550.00. From there the 1300.00 area may be supportive.


The chart is showing that Ripple was unable to escape the selloff last week as it was pushed down to 0.6508. The chart suggests that this market is in a consolidation pattern of lower lows and lower highs since mid April potentially forming a bull flag. Price is currently trading around 0.9772. A break above the high from last week at 1.7040 may suggest a test on the high from April at 1.9650 may be on the cards. The 2.0000 level may reinforce this as resistance but a push higher might target 2.2000. Alternatively a confirmed  loss of the 1.0000 puts pressure on the 0.9000 and may seek to test 0.8680 as the previous higher low. A loss of this level potentially opens the way to 0.7600, 0.7000 and the 0.6500 low.