Weekly recap: Bitcoin and Ethereum build the support for another major upswing

Following Monday's, August 24th, open, the flagship cryptocurrency went through a bullish impulse that saw its price rise by nearly 1.50%. Bitcoin kicked off the day at $11,650 and quickly surged to hit a weekly high of $11,823. The upward price action in such a short period after the first trading session of the week began suggested that BTC was bound for a further advance.

As investors became overwhelmingly confident about further gains, they started placing their bets. However, the market turned around on August 25th, wiping out many traders. Roughly $152 million worth of long and short Bitcoin positions were liquidated across the board on this day alone. The 5.53% nosedive the pioneer cryptocurrency took on Tuesday was the leading cause for so many margin calls.

Indeed, BTC went from $11,753.26 to hit $11,102.72, which was the week's lowest price point. This price hurdle, however, served as stiff support allowing prices to rebound. By Wednesday, August 26th, at 16:00 UTC, Bitcoin had recovered nearly 4% of the losses incurred, rising to a high of $11,540.

Another downswing took place throughout Thursday, August 27th, that appeared to have formed a double bottom pattern on the hourly chart. Following the peak of the previous day, the bellwether cryptocurrency dropped by 3.60% to hit a low $11,125. The "W" pattern was then confirmed as Bitcoin bounced off this support level to close the week at $11,535, providing investors a negative weekly return of 0.99%.

Ethereum Goes Through High Volatility But Closed the Week With 1.17% Gains

Like Bitcoin, the smart contracts giant also kicked off the week on the right foot. Its price surged from Monday's, August 24th, open of $390.78 to hit a weekly high of $411.97, representing a 5.42% upswing. Given the significant gains posted on Monday alone, ETH holders seem to have gotten over-excited about the upward price action, and the bears noticed it.

As a result, a considerable number of sell orders began piling up across different cryptocurrency exchanges. The mounting selling pressure was significant enough to push Ether's price down over 10%. The second-largest cryptocurrency by market capitalization went from trading at a high of $411.97 on Monday to reach $369.36 on Tuesday, August 25th, which was the lowest price point of the week.

Regardless of the downward price action, demand quickly picked up around this support barrier, allowing ETH to rebound. Ethereum then surged by 6.54% to hit a high of $393.50 by Wednesday, August 26th, at 16:00 UTC. Such a stiff price hurdle was able to keep surging prices at bay, triggering a 5.59% retracement that extended throughout August 27th.

The $370 support level proved to be an area of significant interest once again, sending Ethereum back up. From that point on, Ether entered an uptrend that saw its price rise over 6.40% to close the week at $295.35. Despite the high levels of volatility that ETH experienced throughout the week, it provided investors a weekly return of 1.17%.

Further Gains on the Horizon

Based on the price action that Bitcoin and Ethereum went through over the past week, it seems like these cryptocurrencies have developed the same reversal patterns on their hourly chart. The appearance of a double bottom formation suggests that BTC and ETH will likely continue to rise towards $11,800 and $410, respectively. But breaking through these resistance levels would likely result in further gains.

Indeed, the top two cryptocurrencies by market capitalization seem to be contained within parallel channels from a macro-perspective. Following the recent test of this technical pattern's lower boundary, it is reasonable to assume that they will surge to test the upper edge. Such a bullish scenario will be confirmed when these cryptocurrencies break above the overhead resistance previously mentioned.

If this happens, Bitcoin may be able to surge towards $12,000, while Ethereum would likely aim for $440. Everything will depend on their ability to continue trading above the lowest price points of the week.