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Crypto Market Cap 11% Bounce Saves Weekly Candlestick – Is This the Turning Point of the Correction?

Last Updated May 6, 2024 8:30 AM
Valdrin Tahiri
Last Updated May 6, 2024 8:30 AM

Key Takeaways

  • The crypto market cap has bounced significantly since its May 1 low.
  • The ongoing bounce shares similarities to that of May-September 2021.
  • Can TOTALCAP break out from its corrective pattern and move to new highs?

After a 25% correction that lasted for 48 days, the Crypto Market Cap (TOTALCAP) bounced, regaining a notable portion of its previous decrease. The bounce also validated a long-term support area and created a bullish weekly candlestick.

Despite the bounce, TOTALCAP needs to increase another 17% to reach its yearly high and another 30% for a new all-time high. Will this bounce mark the beginning of an upward trend aimed at achieving these milestones?

Meaning Behind the Crypto Market Cap Bounce

TOTALCAP has corrected since its yearly high  of $2.72 trillion in the beginning of March. The decrease led to a low of $2.02 trillion on May 1, a fall of 25% measuring from the high.

Last week saw a bullish turn of events as TOTALCAP experienced a bounce, forming a significant long lower wick exceeding 11%. Two similar lower wicks were created in the weeks prior (green icons), a sign of buying pressure.

The bounce also validated the $2.13 trillion horizontal area, a critical area that previously provided resistance. Additionally, TOTALCAP reached a bullish close, creating a bullish hammer candlestick.

TOTALCAP Creates Significant Bounce
TOTALCAP Daily Chart | Credit: TradingView

The three wicks are very similar to the ones in May-September 2021 (white icons), which catalyzed the increase to the all-time high of $3 trillion in November 2021, which still stands.

On a more bearish note, the weekly MACD has made a bearish cross (red circle). However, this had also happened in the 2021 movement, and TOTALCAP reached a new all-time high despite it. Following that, the bearish divergence in the MACD (green) marked the all-time high. It remains to be seen if the same will happen again.

TOTALCAP Correction Could be Over?

The daily time frame chart aligns with the hypothesis that the bottom is in. Since the yearly high, TOTALCAP has traded inside a descending parallel channel. These channels usually contain corrective movements.

The crypto market cap has bounced numerous times at the channel’s support trend line (green icons), most recently on May 1 and 2. The final bounce triggered an upward movement of five successive bullish daily candlesticks, taking TOTALCAP above the channel’s midline. This is the first step in confirming the correction is over, which hinges on a breakout from the channel.

Short-Term Crypto Market Cap Breakout
TOTALCAP Daily Chart | Credit: TradingView

Technical indicators support the possibility of a breakout. The RSI broke out from its resistance trend line (green) and has just moved above 50, while the MACD is close to crossing into positive territory (green circle).

TOTALCAP Prediction: When Will It Reach Another All-Time High?

The assessment of the price action and indicator readings is bullish. The wave count bolsters this perspective, indicating the fifth and final wave of a long-term upward trend has started (white).

The upward movement started in November 2022, and wave three extended, continuing from June 2023 to March 2024. Then, the corrective wave four ended right at the 0.382 Fibonacci retracement support level of $2.05 trillion. If the count is accurate, wave five will end between $3.16 – $3.58 trillion.

Crypto Market Cap Wave Count
TOTALCAP 2-Day Chart | Credit: TradingView

The target area is found by the 1.61 external Fibonacci retracement of the recent drop and by projecting the length of wave one to wave five.  Afterward, a significant correction of the entire upward movement could occur.

Despite this bullish TOTALCAP prediction, falling below the wave four low of $2.05 trillion will invalidate the count. Then, TOTALCAP will likely correct to the 0.5 Fibonacci level at $1.85 trillion.

Upward Movement Can be Final Push

To conclude, there are bullish signs in multiple time frames, created by the price action, indicator readings and wave count. These all point to the May 1 low marking the end of the downward trend and starting a new upward movement which will lead to a new all-time high.

However, after the high is reached, TOTALCAP is likely to undergo a significant correction lasting several months.

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