Bitcoin and Ethereum Prepare to Pull Back Ahead of More Gains

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• Bitcoin aims to resume its uptrend but faces heavy resistance at $48,500.
• Ethereum must break through $3,500 to move forward.
• The emergence of sell signals on the BTC and ETH 12-hour charts indicates that the assets may face a correction before higher rallies.

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Bitcoin and Ethereum issued sell signals after posting significant gains. Although bearish formations have proven to be accurate in the past, increased buying pressure may quickly invalidate the pessimistic short-term outlook and lead to higher rallies.

Bitcoin is trading in a narrow range

Bitcoin and Ethereum may face a correction.

Bitcoin appears to have slowed its momentum after the 12% price rally it saw on October 1. The leading cryptocurrency has been consolidating within a narrow range ever since. The resistance level at $48,500 is preventing BTC from advancing further, while the support at $47,500 contains any surge in selling pressure.

While a crucial 12-hour candlestick close outside this price pocket should determine the next direction for Bitcoin, one technical indicator is predicting a correction before higher rallies.

The Tom DeMark (TD) sequential indicator provided a sell signal on the 12-hour BTC chart. The bearish pattern developed in the form of a green nine candle, anticipating a retracement of candles from 1 to 4 for 12 hours.

IntoTheBlock’s In/Out of the Money Around Price (IOMAP) pattern shows that Bitcoin’s negative potential can be set at $45,700. The transaction history reveals that over 1.11 million addresses have already purchased 590,000 BTC around this price level.

This large area of ​​interest may have the ability to absorb any increase in downward pressure. Stockholders who have been in the green may try to prevent their investments from going out of the money, slowing the upward trend.

On the other hand, IOMAP groups show that Bitcoin faces stiff resistance in the future. More than 1.44 million addresses were purchased, approximately 605,000 BTC between $47,900 and $49,270. Breaking this supply barrier could invalidate the TD sell signal, pushing the leading cryptocurrency to $52,000 or higher.

Ethereum can test bulls

Ethereum has also enjoyed a bullish price movement since the new monthly opening. The second largest cryptocurrency by market capitalization gained more than 500 points in market capitalization to reach $3,500.

Given the recent significant gains, the sequential TD indicators are indicating that an increase in profit taking may be underway. This technical indicator provided a sell signal in the form of a green nine candle on the 12-hour chart of ETH. The bearish pattern is forecasting a correction of the candles over one to four hours before the uptrend resumes.

Rising selling pressure could push Ethereum towards 38.2% or 23.6% Fibonacci. The critical support areas are valued at $3,200 and $3,040, respectively.

While the data suggests that Ethereum could suffer a significant drop, it may have a chance to invalidate the TD sell signal and move further. The decisive 12-hour candle close above the setup trend line and the 61.8% Fibonacci retracement level at $3,500 could encourage investors to buy more ETH. Once this resistance level is breached, the steady increase in buy orders could be large enough to push ETH to $4,000 or even $4,400.

This news is brought to you by Phemex, our favorite derivatives partner.

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