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Blocksmith Says: Don’t Be Fooled By the Bounce

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There was a big upside reaction in crypto in today’s session but don’t get too excited yet. ETH tested a confluence of key support and deep oversold levels. The bounce was seen across other risk assets as well.

However, as I mentioned in yesterday’s Bitcoin note regarding the breakdown of key support, the expectation is that any bounce now is likely to be pushed back at key resistance (previously support).

My feeling is that for Ethereum, this is at around US$2,300, marked by the black arrow.

If some sort of bottom is forming in Bitcoin and Ethereum and we have just been through a false breakdown, which is at least feasible, then we really need to see some proof of stabilisation first.