A quick look on Ethereum

The ETHUSD pair formed a very large inversed Head&Shoulder pattern since the beginning of Ferbruary, but now it is facing significant resistances to complete the pattern: the down trendline and the 50% fibonacci retracement. If price breaks above that big down trendline it may rally up to the 78.6 fibo level which is also the target of the H&S pattern. However, that H&S pattern now is gradually turning invalid. Instead, a newly rising wedge is forming on the 4H chart for the past few weeks. For those who dont know, a rising wedge that forms after a rally is a reversal pattern and this one has the target at 762 which coincides with the 23.6% fibo level.

What makes this interesting is that we are forming a small Head&Shoulder patter inside that wedge and it has target at the small support below (850), let's see if this pattern really forms. If price breaks below the support of the wedge, it may fall to 850 level and finally the 23.6% level. Volumes inside this small H&S is particularly high despite the small candles, which promises a boom in price more likely to the downside. Volume is also decreasing, which is typical of price action during pattern formation.

The overall picture is still bearish although the ETHUSD pair is showing few reversal signals: bullish divergence on RSI (invalid now), bullish cross of the 50 SMA and 200 EMA.

Happy and safe trading!

Comment:

Target of the tiny head&shoulder pattern reached.

There’s also chance that ETH may reverse from the 800 area. Let’s see if we reach the target of the rising wedge or not, which is the 23.6 fibonacci level.

Comment:

ETH actually reversed from the 800 area just as we expected before touching the 23.6 retracement level. It is now trading below both the 50 and 200 EMA which are very strong resistances. We may short from 860 area, target: 790-770