Since entering July, the cryptocurrency market has swept away the ongoing decline of the first half of the year, rebounding strongly for four consecutive trading days with hardly any notable corrections. Among them, Ethereum has performed particularly well, with the BTC/ETH exchange rate rising from 0.026 all the way up to 0.0285, an increase of nearly 10%, leading to ETH's overall rise being significantly stronger than BTC, forming the most typical recent pattern of "two strong, one weak".

However, following the continuous short squeeze, some warning signs have begun to emerge in the market.

Currently, both BTC and ETH daily charts have entered a short-term overbought zone, with increasing profit-taking after the consecutive rises. Yesterday's daily chart also recorded its first upper shadow, indicating a clear selling pressure starting from above, and the divergence between bulls and bears is intensifying.

Today's weekly close, if it ultimately forms a weekly bullish engulfing candle, will suggest that the overall trend still leans towards a strong structure. This round of price increase, in terms of time, space, and momentum, has exceeded the market's previous general expectations, indicating that the short squeeze still possesses a certain level of inertia.

However, after the continuous rise, a technical correction may actually be more beneficial for the subsequent trend to continue strengthening. Compared to chasing highs, waiting for a dip to buy low will offer a more reasonable risk-reward ratio.

₿ Bitcoin (BTC)

View: High-level fluctuations, leaning bearish on rises.

Currently, around 63,200 USD, a large number of short positions have accumulated. Liquidity tends to be low over the weekend, and should a rapid surge or spike occur, it is more likely to create violent fluctuations in a short time frame.

It is important to note that even if the price briefly surpasses 63,200, it cannot be easily interpreted as a trend reversal. Without a sustained increase in trading volume, the continuity of the breakout remains questionable.

Furthermore, during this round of price increase, the one-hour level top divergence has persisted for more than 72 hours. Such prolonged divergence is uncommon in normal markets, resembling a sustained short squeeze under low liquidity conditions rather than a healthy trend upward.

Therefore, the short-term focus should be more on whether the support around 62,000 USD is effective; if it falls below, the market may enter a phase of technical adjustment.

Support levels to watch: 61,500 - 62,000, 60,666

Resistance levels to watch: 63,200 - 63,600, 64,188

Ethereum (ETH)

View: Beware of corrections after overbought, not advisable to chase highs at this level.

This round of ETH's significant increase is primarily driven by the rapid rebound of the BTC/ETH exchange rate, rather than just the inflow of funds into ETH itself.

Because of this, once the exchange rate begins to decline, ETH's adjustment may likely also be greater than that of BTC.

Currently, the 1,780 - 1,800 USD range has become the most important resistance area for this round of rebounds.

• If it breaks through 1,800 USD with increased volume, the rebound space is still expected to continue opening up;

• If it continues to face resistance with reduced volume, it is more likely to retrace to 1,720 - 1,730 USD to find new support.

It is important to note that ETH still falls under a superficial recovery trend following a roughly 35% drop in June, and overall trading volume has not significantly increased, indicating that new capital is still insufficient. Therefore, until a breakout of key resistance occurs with increased volume, the current trend should still be defined as a reactive recovery rather than a new upward trend.

Support levels to watch: 1,720 - 1,740, 1,700, 1,680

Resistance levels to watch: 1,780 - 1,800, 1,820, 1,845

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