Hello everyone. In this analysis, I'd like to review several essential charts regarding Ethereum and discuss its potential future price action.
The first chart is the one above, showing how ETHUSD formed a triple top that has now been broken. We don't know whether this is a proper SFP and will lead to lower prices; however, we need to be aware that it could. The market currently looks pretty strong, but the double bottom at 1000$ will most likely be broken at some point.
Based on the main chart and the gaps above, there are several targets for ETH to test eventually. The area from 1300$ to 1500$ is considered resistance, with the most apparent target being 1425$. Personally prefer key breakdown levels that haven't been retested, as they usually end up being retested at some point and tend to act either as support or resistance. Gaps are also fascinating and can be seen as little magnets that tend to pull the price towards them, as they also tend to get filled at some point. On this occasion, I can see the first colossal gap being partially filled and then the price falling, with the gap at 2670 being the ultimate target in case the bottom is in or in case we get a massive bear market rally.
Ethereum put in a very interesting bottom, as it swept the Jan 2021 lows and bounced at the 300 Weekly Moving average. The combination of the two is more than enough for the market to rally significantly. This was the first time it hit the 300 WMA, while Bitcoin has only touched it once during the March 2020 crash bottom. The market is currently chopping around the 200 WMA and somewhat looks like it is in accumulation mode. However, I don't believe the final bottom is in, and this is just a dead cat bounce. Now the question is how big the bounce will be, and the truth is that I have no idea. Something else worth noting is that ETH swept the Jan 2021 low when CME was closed, and the price tends to trade again at levels that it traded at when CME was closed. On CME, a triple bottom / pure double bottom has formed, something that is relatively bearish as the price could eventually break it.
It looks like the market has no real support down to 430$, and the solid support starts from 250$ and goes up to 430$. As you can see on the chart above, 1420$ also happens to be the Jan 2017 ATH and the weekly close before the parabolic rally in Q1-Q2 2021.
Based on this last chart, believing that the bottom is in, given how oversold the market got, makes a lot of sense. Essentially we got as oversold as we did back at the bottom of the 2018 bear market, after 11 straight red candles, with the Tom Demark indicator bottoming on a TD 9, an A13, and S13. Therefore it is no surprise that the market is bouncing here. Usually, after such a perfect combination of oversold signals, the price tends to go up or sideways for 1-4 candles; this time, it could do that for longer.
For a very long time, I expected ETHBTC to retest 0.052, and it finally did so. Initially, it dipped slightly lower but quickly closed above it and has now even reclaimed the May-July 2021 lows. I can easily see this ratio going up to 0.066 to retest the critical breakdown zone and the Yearly Pivot. Afterward, I expect it to trade lower and head towards 0.04 and the original long-term trend.
0.04 could be seen as the neckline of a massive inverse head and shoulders pattern that broke to the upside in 2021, and the 200 WMA is right into that critical zone; therefore, a retest would make a lot of sense. At the moment, ETHBTC's trend is relatively neutral, and someone could claim that the range that started forming in May 2021 is bullish; however, I believe that it was more like distribution rather than re-accumulation. Ethereum's fundamentals are solid, yet this doesn't change the fact that it could head lower vs. BTC either because the market dumps hard or there is a catalyst that takes BTC higher.
The first chart is the one above, showing how ETHUSD formed a triple top that has now been broken. We don't know whether this is a proper SFP and will lead to lower prices; however, we need to be aware that it could. The market currently looks pretty strong, but the double bottom at 1000$ will most likely be broken at some point.
