Crypto at a Crossroads: Breakout Holds or Pullback Begins for Bitcoin and Ethereum

Crypto markets began the week with confidence. Charts broke higher. Momentum followed. Sentiment shifted. For a brief moment, it felt like the storm had passed.

Now comes the hard part.

Bitcoin and Ethereum are no longer sprinting. They are pausing, standing still at levels where markets will decide whether optimism survives or quietly unravels. This is the proof phase, and history shows it can be unforgiving.

A Promising Start That Changed the Mood

Starting off strong, Bitcoin kicked off the week with a series of technical wins that bulls have been waiting for many months. The price moved up through the long-standing orange consolidation zone; additionally, the red downtrend line that had previously capped rallies has finally been broken. Alongside these technical signals, an extremely bullish island reversal pattern formed, with a gap in mid-January followed by an upward gap on Monday.

From a technical perspective, this was textbook strength.

Ethereum also demonstrated notable relative strength. It broke away from its consolidation area and met its minimum upside price target, boosting confidence within the crypto space.

However, a strong start does not always guarantee a strong finish.

Bitcoin Hits the Wall Again

Bitcoin's rally has stalled at the same levels as before. The resistance zone between 94,116 and 95,694 has rejected prices once more, marking the third failed attempt to push above this level. The immediate response was a fall back toward the lower end of Monday's gap, testing traders' resolve.

This resistance area is critical because it reflects market sentiment towards Bitcoin. If prices can close above 89,748 on a daily basis, the bullish island reversal would remain valid. This would suggest that buyers can sustain profits and withstand selling pressure, setting the stage for another attempt to break through.

Conversely, if prices fail to stay above 89,748 on a daily close, the outlook shifts dramatically. A daily candle closing below that level would invalidate the bullish reversal, indicating the breakout was unsuccessful. Bitcoin's momentum indicators have already turned bearish, increasing the likelihood of a significant decline.

Should prices fall below 89,748, the next support levels to watch are 85,176—the lower boundary of the prior consolidation—and if broken, 83,437. These levels need to hold before the market risks testing the key psychological level at 80,000, which was last year's low.

Ethereum Faces a Quieter but No Less Serious Test

Ethereum's week has been less forgiving, losing its hold on the $4,000 resistance zone. After a minor pullback and consolidation, ETH tested and failed to retest support around $3,800. The previous higher highs have been negated, and downward momentum is intensifying, with prices dropping through the $3,800 support into the $3,600 range.

Indicators have also turned lower, reinforcing the weakness. Pressure is mounting on the $3,800 support, which has acted as both support and resistance over the past two weeks.

Currently, ETH is resting on the green trendline drawn from the previous high in December. This trendline has been a foundation of ETH's upward trajectory since early December.

If ETH breaks below this trendline, the next target is around $3,027. This area serves as an interim support before a potential decline to test the major support zone between $2,757 and $2,794, as indicated by the 61.8 per cent Fibonacci retracement.

This zone between $2,757 and $2,794 represents the last line of defence before the market approaches last year's lows.

The Takeaway for Traders Right Now

Step back. Observe. Let the price action speak.

If support holds, breakout signals will gain credibility, and new trading opportunities could emerge. If support fails, capital preservation must be the priority.

This is how markets differentiate between conviction and speculation.

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.