Ethereum: Technical Analysis. Bull or Bear, possible weeks ahead
Hi everyone, this is my first post here on TradingView. A little bit about me: I'm an Economics nerd (although, compared to some of the folks here, I feel like a total noob). I graduated from the University at Albany in 2011 with a major in Economics and minor in Computer Applications in Business. Currently I work as a Business Systems Analyst for one of the top hospitals in the Albany, NY region. I got into Cryptocurrencies beginning of last year when BTC shot through the roof, started my own mining and then trading. But unlike many who got in because of FOMO and then got out because of FUD, I've become a superfan of the crypto-currency asset class, primarily because I truly see the future of transactions and contracting through various blockchain technology and secondly (luckily) my knowledge and intuition in Economics has helped me navigate this CRAZY space with a little bit more calm and insight than some who may not be as into Economics and Economic theories as I am.
Before I get into my first analysis I just want to clarify a few things:
* This is not trading advice for others, just my analysis for myself that I wanted to share.
* I hold (XRP, TRX, XLM) and trade (ETH, BTC, BCH) cryptocurrencies.
* I trade conservatively. ALWAYS DISCARD EXTREME PEAKS AND TROUGHS.
* Mathematics is the language of the universe, and it is the same in anything that can form a trend.
* Layman's terms are the best. As long as you have common sense and intuition in numbers, it's all a game of averages.
* Knowledge is power. Especially in the Crypto world. Game of averages only get affected by ** major news/breakthroughs/breakdowns **
Alright so looking at the following chart, what do we see?
During the gut-punch that was November 2018, Ethereum like most major CCs, crumbled. Between Nov 12th and 14th, the price plummeted from ~$210 to ~$165, briefly trying to form a support to bounce from, which failed. Between Nov 18th and 20th, another drop happened to ~$128, which basically continued until finding the bottom around December 7th @ $83.00 and a double bottom on December 15th.
This allowed us to draw some parallel lines which would indicate, on average, what channels the prices should be moving. As we've already established, $128 failed to provide support on Nov 18th to bounce back from, and we've had solid support from ~$83 onwards. We can see from the following graph, that upward movement following the double bottom has been consistent over a fairly long period of time (30+ days now).
The issue that traders such as myself are (were?) facing is basically finding solid support above the $83 zone. Now if you follow the chart above, again, you'll see that following bounce from $83 between Dec 10th - 17th, prices moved up pretty nicely until Dec 24th. By nicely, I mean steady, sustainable upward movements. The sudden sharp upward movement of Dec 24th was always going to be heavily corrected in this bear market, and that is what happened, although the Bulls (myself included) tried to sustain the $150 support levels until Jan 9th when another massive sell bear-attack happened which broke the $130 support line, and we were able to find some solid support between ~$113 and ~120.
What does all this mean? We've been moving in a narrow channel between $114 and $120 since January 13th. We've seen some major pumps and some even more massive dumps which show strong resistance above $120, possibly up to $130. Mathematically, if you look at these parallel lines, you can see clearly, how the prices are moving "ON AVERAGE" around those lines. Today is Sunday, January 20th. Prices for Ether are around $117 after another huge drop this morning, BUT 1 HR RSI indicators show that Ethereum remains in undersold condition and MACD shows that volume is pretty low, so there's room for improvement.
The important thing to remember is if you look at the 3 possible patterns I've drawn out, you can clearly see (in layman's perspective) what needs to happen.
* Scenario 1 Blue line: Best case scenario if price breaks $120, $130 and then hovers between $130-$134 (lean bull-ish). Means MAJOR solid support has formed from $116.
* Scenario 2 Green line: Best case scenario if price breaks $125, $135, then holds between $135 - $140 (DEF lean bull-ish). Means MAJOR solid support formed from $120.
* Scenario 3 Red line: Worst case scenario most of us wouldn't want to see. Price barely breaks $120, and then hovers between $120-$124. If this happens, another lower parallel line will need to be drawn as an average of the lower prices. Means MINOR support has formed around $114 and is susceptible to the Bear.
So if we see continued lower highs followed by CONSISTENTLY HIGHER lows or HIGHER HIGHS, that's a good sign. Scenario 1 is the middle of the line scenario, without extreme peaks and troughs. Scenario 2 confirms bear market is slowly retreating FOR SURE. Scenario 3: bear is still not hibernating/we're just not sure. By end of January/early Feb, if Ether prices are not "ON AVERAGE" over $132, I'd be concerned, but anything over $130 CONSISTENTLY is a good sign. If however, prices are STAGNATING around $116-$120, I'd be concerned.
So trade carefully, if you have your hard earned money invested here or do day trade, don't be too greedy. Try to take profits between narrow channels the best you can. My analysis basically takes into account the average, middle of the lines movement, to give a picture on where the average position should be following bounces in parallel channels. There might be extreme highs or extreme lows but as long there's not a pattern forming, you can't take the extreme highs or lows as indicators of bull or bear.
Finally, definitely don't pay attention to analysis that say BTC will drop to $200 or similar nonsense. I've seen some analysis by some very scrupulous posters, and I want to make the community aware that these are just really messed up people who just want to create FUD among even a few of our community members, and profit off their naivety. CCs are the future of trade and commerce. Invest into meaningful projects, trade some, HODL some, and read read read!!! Be smart and don't be super greedy. Thanks for reading. Please like my post if you find it interesting! :)
Before I get into my first analysis I just want to clarify a few things:
* This is not trading advice for others, just my analysis for myself that I wanted to share.
* I hold (XRP, TRX, XLM) and trade (ETH, BTC, BCH) cryptocurrencies.
* I trade conservatively. ALWAYS DISCARD EXTREME PEAKS AND TROUGHS.
* Mathematics is the language of the universe, and it is the same in anything that can form a trend.
* Layman's terms are the best. As long as you have common sense and intuition in numbers, it's all a game of averages.
* Knowledge is power. Especially in the Crypto world. Game of averages only get affected by ** major news/breakthroughs/breakdowns **
Alright so looking at the following chart, what do we see?
During the gut-punch that was November 2018, Ethereum like most major CCs, crumbled. Between Nov 12th and 14th, the price plummeted from ~$210 to ~$165, briefly trying to form a support to bounce from, which failed. Between Nov 18th and 20th, another drop happened to ~$128, which basically continued until finding the bottom around December 7th @ $83.00 and a double bottom on December 15th.
This allowed us to draw some parallel lines which would indicate, on average, what channels the prices should be moving. As we've already established, $128 failed to provide support on Nov 18th to bounce back from, and we've had solid support from ~$83 onwards. We can see from the following graph, that upward movement following the double bottom has been consistent over a fairly long period of time (30+ days now).
The issue that traders such as myself are (were?) facing is basically finding solid support above the $83 zone. Now if you follow the chart above, again, you'll see that following bounce from $83 between Dec 10th - 17th, prices moved up pretty nicely until Dec 24th. By nicely, I mean steady, sustainable upward movements. The sudden sharp upward movement of Dec 24th was always going to be heavily corrected in this bear market, and that is what happened, although the Bulls (myself included) tried to sustain the $150 support levels until Jan 9th when another massive sell bear-attack happened which broke the $130 support line, and we were able to find some solid support between ~$113 and ~120.
What does all this mean? We've been moving in a narrow channel between $114 and $120 since January 13th. We've seen some major pumps and some even more massive dumps which show strong resistance above $120, possibly up to $130. Mathematically, if you look at these parallel lines, you can see clearly, how the prices are moving "ON AVERAGE" around those lines. Today is Sunday, January 20th. Prices for Ether are around $117 after another huge drop this morning, BUT 1 HR RSI indicators show that Ethereum remains in undersold condition and MACD shows that volume is pretty low, so there's room for improvement.
The important thing to remember is if you look at the 3 possible patterns I've drawn out, you can clearly see (in layman's perspective) what needs to happen.
* Scenario 1 Blue line: Best case scenario if price breaks $120, $130 and then hovers between $130-$134 (lean bull-ish). Means MAJOR solid support has formed from $116.
* Scenario 2 Green line: Best case scenario if price breaks $125, $135, then holds between $135 - $140 (DEF lean bull-ish). Means MAJOR solid support formed from $120.
* Scenario 3 Red line: Worst case scenario most of us wouldn't want to see. Price barely breaks $120, and then hovers between $120-$124. If this happens, another lower parallel line will need to be drawn as an average of the lower prices. Means MINOR support has formed around $114 and is susceptible to the Bear.
So if we see continued lower highs followed by CONSISTENTLY HIGHER lows or HIGHER HIGHS, that's a good sign. Scenario 1 is the middle of the line scenario, without extreme peaks and troughs. Scenario 2 confirms bear market is slowly retreating FOR SURE. Scenario 3: bear is still not hibernating/we're just not sure. By end of January/early Feb, if Ether prices are not "ON AVERAGE" over $132, I'd be concerned, but anything over $130 CONSISTENTLY is a good sign. If however, prices are STAGNATING around $116-$120, I'd be concerned.
So trade carefully, if you have your hard earned money invested here or do day trade, don't be too greedy. Try to take profits between narrow channels the best you can. My analysis basically takes into account the average, middle of the lines movement, to give a picture on where the average position should be following bounces in parallel channels. There might be extreme highs or extreme lows but as long there's not a pattern forming, you can't take the extreme highs or lows as indicators of bull or bear.
Finally, definitely don't pay attention to analysis that say BTC will drop to $200 or similar nonsense. I've seen some analysis by some very scrupulous posters, and I want to make the community aware that these are just really messed up people who just want to create FUD among even a few of our community members, and profit off their naivety. CCs are the future of trade and commerce. Invest into meaningful projects, trade some, HODL some, and read read read!!! Be smart and don't be super greedy. Thanks for reading. Please like my post if you find it interesting! :)
Trade closed: stop reached:
Hey everyone, today is the 22nd of January, and I think I can say confidently that the Bear's in. Check out the first image:
As I stated in my original analysis, price movements would have to get back in that purple channel, or at least, move just under but progressing upwards, and that didn't happen. So what now?
We can see in the above image that there is a CLEAR downtrend of BARTS followed by smaller BARTS (or peak followed by sideways-ish movement, then slight drop, then same pattern but price is descending). Here's the chart with arrows just so you understand what I'm talking about...
Another image showing it zoomed in and more importantly, you can see the RSI showing on the 1 hr chart that conditions will soon be oversold. That confirms the BART pattern because the next drop will coincide with the fact that oversold conditions almost always leads to sell outs, especially in the bear market.
I'm thinking this will continue for a while, maybe we'll have some sideways movement without reaching $83 again, but prices should stagnate for a while. I don't mind this, because other than random and artificial jumps in price (which you'll notice in all these images but each time pullbacks happened) you can still trade daily in a $4-$5 range... Obviously that's not great for everybody, but large sum investors can make decent daily profits with these conservative trading ranges.
Also, I can personally say from trading in the last few days that people are penny pinching. However if you maintain daily starting positions a couple $$$ above the daily low and close a couple $$$ under the 'low-high' (because that really what we should see on average, again, ignore those fake jumps, they aren't sustaining at all), then not bad.
That's basically what I'm looking to do. Can't wait for the bulls to return.
I'll periodically update this and thank you for your support! :)
As I stated in my original analysis, price movements would have to get back in that purple channel, or at least, move just under but progressing upwards, and that didn't happen. So what now?
We can see in the above image that there is a CLEAR downtrend of BARTS followed by smaller BARTS (or peak followed by sideways-ish movement, then slight drop, then same pattern but price is descending). Here's the chart with arrows just so you understand what I'm talking about...
Another image showing it zoomed in and more importantly, you can see the RSI showing on the 1 hr chart that conditions will soon be oversold. That confirms the BART pattern because the next drop will coincide with the fact that oversold conditions almost always leads to sell outs, especially in the bear market.
I'm thinking this will continue for a while, maybe we'll have some sideways movement without reaching $83 again, but prices should stagnate for a while. I don't mind this, because other than random and artificial jumps in price (which you'll notice in all these images but each time pullbacks happened) you can still trade daily in a $4-$5 range... Obviously that's not great for everybody, but large sum investors can make decent daily profits with these conservative trading ranges.
Also, I can personally say from trading in the last few days that people are penny pinching. However if you maintain daily starting positions a couple $$$ above the daily low and close a couple $$$ under the 'low-high' (because that really what we should see on average, again, ignore those fake jumps, they aren't sustaining at all), then not bad.
That's basically what I'm looking to do. Can't wait for the bulls to return.
I'll periodically update this and thank you for your support! :)
Our movement is still around the red line, but looking at RSI and MACD there's room for improvement. Need some consistent moves upwards without getting shorted over and over again.