TGIF - Here’s some commentary on Bitcoin and Ethereum from today’s Opening Look - A Few Fireworks. Beyond this, we also discussed a key indicator we’re watching for equity markets, dissected the XLY Consumer Discretionary ETF and walked through the next steps for AMZN and TSLA.
In Thursday’s piece, entitled Complacency, we spent time talking about sentiment and the current state of Demark indicators and recommended two new trade ideas, among other topics.
Have a great weekend. Best, Frank
Bitcoin
Over the last 24 hours, Bitcoin completed this bearish H&S pattern, followed through to the downside, pivoted near recent lows around 100k and now is testing the same breakdown zone.
This makes today’s price action really important. Essentially, this could end up being a major bear trap, which clearly is bullish. Failing to fully reclaim its breakdown area near 103k, however, could reignite bearish momentum.
Ethereum
Ethereum got hit hard with Bitcoin’s drop yesterday. The potential inverse head and shoulders pattern is still intact right now. However, it will need to encourage renewed demand soon for that bullish structure to remain valid.
Also worth noting is that the 14-day RSI has been trending lower as Ethereum has consolidated over the past few weeks. This creates a clear negative divergence, and it’s now critical for its RSI to hold near the 50 level, which it has been trying to do overnight and this morning.
We can view the recent consolidation phases as “trading boxes,” as well, which is similar to what we often highlight in the SPX. Ethereum is attempting to bounce near the bottom of the most recent box.
The ideal outcome would be a breakout through the top of this box, of course. That would be notable given we saw five consecutive trading box breakdowns during prior downswing. A downside resolution of this current range would clearly be bearish after two straight box breakouts.
Lastly, in the third chart, Ethereum continues to struggle near the 50% retracement level of the decline from its December 2024 peak to the April 2025 low. That will need to change for a potential breakout finally to occur.
So, while there’s no technical breakdown yet—and no clear bearish pattern like we see in Bitcoin—holding above the 2,400-level in the short term will continue to be important. Below that, there’s very little nearby support.
