These Indicators align to project Ethereum revisiting 1K
Looking at the Ethereum daily chart, hearing and reading about all the calls for a crypto bottom, one would get confused as to what is happening, might happen, and if we are missing out on a momentous time where it really is the very bottom. So, based on these, I took the time to pull out the Ethereum daily chart, decided to either put a bull case or a bear case scenario, whichever is more apparent, and set the scene. Then this scenario's validation or invalidation would be telling of where things are going - bull or bear.
The bear case prevailed as it was very apparent. Below is how it was constructed...
First group of indicators: the 200EMA, 55/2 Hull EHMA and trend change patterns.
See the orange 200EMA line, the red/green ribbon and the blue line marking out the tops and bottoms with the yellow resistance/support line.
Price has not been above the 200EMA since April 2022, and had actually crossed down and failed an attempt to breakout in mid August. The 200EMA is not leveling up nor poised to change (unlike early August).
Price is above the Hull EHMA but the ribbon turned red in the recent week. Now, if and when price falls below the ribbon, it would be really bearish. It failed an attempt to break down in the previous week, but there does not appear to be momentum nor strength to keep it up for much longer.
The trend change patterns are a series of either higher highs and higher lows or lower highs and lower lows, given that the second higher high, or second lower low would set the breakout or breakdown point respectively (yellow S/R line). In May 2022, it was a clear break down. In July 2022, it was a break up. Currently, a potential pattern is forming and the second lower low (support level) has been set. A break down of this level would be bearish, and as per May 2022 example, it could fall off a cliff (towards the last low for a start). Having said that, the MACD in this case a opposing (as compared to the previous two events). Not sure what to make out of this for now, but a spike in price would certainly clarify. The fact that the longer term histograms (in the background ) is slightly bearish, tells that a revisit to the last low is slightly more possible.
Second group of indicators: the TD Sequential
See the numbers above or below the candlesticks
Referencing and credits to Thomas Demark, side mention about Jason Perl who wrote a simplified and easier to read book of Thomas Demark's work.
In the TD Sequential indicator, there are specific rules, particularly one that specifies a TD Setup (a series of 9 candles) defines the support resistance lines for the opposing TD Setup to break and effect a trend change. In March 2022, it was a bull trend. Which was then broken in May 2022, where the TD Setup (red) broke down the TDST (red dotted line). This was indication that the trend is bearish. Another TD Setup was done in June 2022. There was no successful opposing TD Setup, and the price failed the breakout of the TDST in mid August, confirming that the trend in force currently is bearish.
Last indicator: Fibonacci retracement and projection
The Fibonacci retracement was set for the recent low in late August, from the recent high in early August. It is not by coincidence that the retracement was to the 61.8% level, and by Fibo projections, the downside target (161.8%) is 1006.
In addition, flipping to the weekly Ethereum chart actually points to a bearish trending environment. The next upper time frame is consulted to find fractal alignments, which always helps in objectivity.
A wider perspective might also to consider the overall global market condition. At this point, cryptocurrencies tend not to do well in the face of an equity market breakdown. So, the tendency of a equity market breakdown, cryptocurrencies are not steady enough (yet) to counter that trend. So, some alignment here is a coincidental downside is imminent.
Invalidating the Bear case...
1. A price spike up over 1718 invalidates the Fibonacci projection;
2. A price spike up over 1718 also invalidates the trend change pattern as a higher high is achieved. This should also push the MACD upwards in a crossover;
3. A price spike above 1844, and sustaining above that level with the start of a TD Setup would give an indication that a bull case is forming; and
4. A price break above the 200EMA and a higher high above 2036 would be a clear indication of a bull case in effect, with the last August low of 1424 converting into a higher low for a larger trend change pattern.
If and when these 4 conditions prevail, then a bull case is presumed, otherwise, the base bear case is default.
Watch the incoming week(s)... Wait for it.
PS. I hope that this analytical breakdown helps to show how prevailing base case models are formed, including the invalidation of the model. Have a good rest of the weekend, and a great week ahead!
The bear case prevailed as it was very apparent. Below is how it was constructed...
First group of indicators: the 200EMA, 55/2 Hull EHMA and trend change patterns.
See the orange 200EMA line, the red/green ribbon and the blue line marking out the tops and bottoms with the yellow resistance/support line.
Price has not been above the 200EMA since April 2022, and had actually crossed down and failed an attempt to breakout in mid August. The 200EMA is not leveling up nor poised to change (unlike early August).
Price is above the Hull EHMA but the ribbon turned red in the recent week. Now, if and when price falls below the ribbon, it would be really bearish. It failed an attempt to break down in the previous week, but there does not appear to be momentum nor strength to keep it up for much longer.
The trend change patterns are a series of either higher highs and higher lows or lower highs and lower lows, given that the second higher high, or second lower low would set the breakout or breakdown point respectively (yellow S/R line). In May 2022, it was a clear break down. In July 2022, it was a break up. Currently, a potential pattern is forming and the second lower low (support level) has been set. A break down of this level would be bearish, and as per May 2022 example, it could fall off a cliff (towards the last low for a start). Having said that, the MACD in this case a opposing (as compared to the previous two events). Not sure what to make out of this for now, but a spike in price would certainly clarify. The fact that the longer term histograms (in the background ) is slightly bearish, tells that a revisit to the last low is slightly more possible.
Second group of indicators: the TD Sequential
See the numbers above or below the candlesticks
Referencing and credits to Thomas Demark, side mention about Jason Perl who wrote a simplified and easier to read book of Thomas Demark's work.
In the TD Sequential indicator, there are specific rules, particularly one that specifies a TD Setup (a series of 9 candles) defines the support resistance lines for the opposing TD Setup to break and effect a trend change. In March 2022, it was a bull trend. Which was then broken in May 2022, where the TD Setup (red) broke down the TDST (red dotted line). This was indication that the trend is bearish. Another TD Setup was done in June 2022. There was no successful opposing TD Setup, and the price failed the breakout of the TDST in mid August, confirming that the trend in force currently is bearish.
Last indicator: Fibonacci retracement and projection
The Fibonacci retracement was set for the recent low in late August, from the recent high in early August. It is not by coincidence that the retracement was to the 61.8% level, and by Fibo projections, the downside target (161.8%) is 1006.
In addition, flipping to the weekly Ethereum chart actually points to a bearish trending environment. The next upper time frame is consulted to find fractal alignments, which always helps in objectivity.
A wider perspective might also to consider the overall global market condition. At this point, cryptocurrencies tend not to do well in the face of an equity market breakdown. So, the tendency of a equity market breakdown, cryptocurrencies are not steady enough (yet) to counter that trend. So, some alignment here is a coincidental downside is imminent.
Invalidating the Bear case...
1. A price spike up over 1718 invalidates the Fibonacci projection;
2. A price spike up over 1718 also invalidates the trend change pattern as a higher high is achieved. This should also push the MACD upwards in a crossover;
3. A price spike above 1844, and sustaining above that level with the start of a TD Setup would give an indication that a bull case is forming; and
4. A price break above the 200EMA and a higher high above 2036 would be a clear indication of a bull case in effect, with the last August low of 1424 converting into a higher low for a larger trend change pattern.
If and when these 4 conditions prevail, then a bull case is presumed, otherwise, the base bear case is default.
Watch the incoming week(s)... Wait for it.
PS. I hope that this analytical breakdown helps to show how prevailing base case models are formed, including the invalidation of the model. Have a good rest of the weekend, and a great week ahead!
