Bitcoin and Ethereum continue a correction that traders have been preparing for weeks. Notably, the two most important recent events for the crypto world were more negative than positive. Central banks (in particular the Federal Reserve) have begun tightening monetary policy, which increases demand for safe-haven assets rather than Bitcoin. The Clarity Act remains only a bill. If the Democrats win control of the US Congress, there is a good chance that this bill will never become law. Thus, the fundamentals for further growth of the crypto market remain doubtful. We do not deny that the asset can rise under any news backdrop — the recent dollar rally is proof of that. However, at this time there are no technical signals except for a very questionable deviation on the 4-hour timeframe.
Meanwhile, US Congressional elections will take place in a week. At the moment, experts assess the Democrats' probability of winning the House at no less than 90% and the Senate at 65%. Thus, the odds are that Trump's party could lose control of both chambers of Congress. What does this mean for Bitcoin? First, as noted, the Clarity Act will not be passed. Second, the US dollar could strengthen after a Democratic victory, as markets would expect positive changes in the US economy and policy. Third, it would be harder for Donald Trump to make controversial decisions, which could also be positive for the dollar and negative for Bitcoin. You're certainly aware that Trump has advocated transforming America into a global crypto hub. If the Democrats win, it is unlikely that Trump and his team will be able to carry out those plans.
The Democrats could also block any new Trump's initiatives that increase US public debt and the budget deficit. They could at least try to block Trump's intentions to restart a war with Iran. Democrats could significantly cut support for tech giants whose stocks are correlated with Bitcoin. And we should not forget that Bitcoin has historically shown sharp declines after US midterm elections. Over the past 12 years, the flagship cryptocurrency has fallen after each midterm election — and not just by a little, but by tens of percent.
Trading recommendations for BTC/USDBitcoin shows signs of the start of a new "bull" trend. This trend began, as is often the case, with a pump that has no specific, clear reason. However, in the near term, Bitcoin may be in decline on the daily timeframe, since price reacted to the last two bearish FVGs and formed a bearish order block. Traders should also note that a breakout of the sideways channel on the daily chart may be a deviation — yes, a deep deviation, but still a deviation. If so, Bitcoin could head for the $70,800 level and even maintain the downtrend that began last year. We believe short positions are the most relevant in the near term. The deviation of the lower band of the sideways channel on the 4-hour timeframe does not look convincing, and a breakout from the 4-hour sideways channel would allow the downward move to resume.
On the daily timeframe, the technical picture for Ethereum has completely changed. Ethereum is now looking toward a new uptrend. However, bulls can currently only lean on the weekly chart, where Ethereum set a course for $4,800 — the upper band of a five-year sideways channel. On the daily timeframe, the first bearish FVG did not produce a noticeable price reaction for Ethereum, while Bitcoin reacted to its own FVGs, and we recall that Ethereum's price is about 80–90% dependent on Bitcoin's price. As Bitcoin began to correct, Ethereum also moved down. Therefore, we expect a decline in the near term. Ethereum's targets are near $2,300 and lower, down to $1,850 and $1,391. On the daily timeframe, Ethereum received a sell signal from the nearest FVG. Several sell signals were formed for Bitcoin, so Ethereum does not even need its own signals to fall. We only need to wait for Bitcoin to exit the 4-hour flat range...
Comments on the chartsCHOCH is a change of character / break of the trend structure. Liquidity means traders' Stop-Losses that market makers use to build their positions. FVG stands for a Fair Value Gap (area of price inefficiency). The price often moves quickly through such areas, indicating the absence of one side in the market. Later, the price tends to return and react to these zones. IFVG is an Inverted Fair Value Gap. After a return to such a zone, the price does not react but impulsively breaks through and then tests it from the other side.
OB means an Order Block. A candle on which a market maker opened a position in order to harvest liquidity and then form their own position in the opposite direction.