MarcPMarkets

ETHUSD: 300 Possible, But Reversal More Probable.

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
ETHUSD update: Bearish price action leads to break of major support area . Now that key levels like 400 and 374 have been cleared, the broader strength of this market is thrust into question.

And the answers can be found when you look back in time. The 300 area, which dates back to November of 2017 was a major break out for tihs market. There is a tendency for old resistance to become new support and if the inversion holds true, 300 area is a possibility to consider.

The fact that price broke 374 places it into a very wide reversal zone that has a boundary in the 280s (not on chart for simplicity). This means next 100 points below offer increased potential for a broader reversal.

At S.C., we had long swing trades in this market and in LTC which were stopped out. The stop at 386 saved us from an additional 40 points of pain. We still hold inventory in BTC because as ugly as this sell off is, the broader structure is not bearish yet.

This entire space is contingent on BTC recovering. And as bearish as the herd is, they are not paying attention to the probability of the location. As long as the low 6Ks or even 5750 holds, the broad bullish impulse structure is still intact. The potential for a bottom to materialize in this area is high.

At S.C., we do not make "predictions" like many of the other "experts". Instead we evaluate probabilities, manage risk and adjust to new information. Following the herd is something we do not participate in.

Probabilities tell us that the current lows are an accumulation opportunity across the board. Our risk management rules tell us to wait. We intend to buy inventory and take on another swing trade long when the structure lines up.

In summary, price can remain weak on the short term, but it is nothing more than an ugly shake out. Just like 18.5K on BTC had the world betting on 30K, these depressed prices are the polar opposite. Even if we could short here, we wouldn't even think of it.

It is funny how no one is afraid to buy at 1250, while no one is afraid to sell at 350? History has proven the crowd is usually wrong at extremes and this situation is no exception.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| http://www.Priceactiontraders.net | Cofounder http://www.seekingcryptos.com (S.C.)





Latest BTC price target update, and takeaways from my meeting to VeChain's CEO Sunny Lu:


Hope you don't mind me sharing here.

GL all!
+1 Reply
Great analysis. I absolutely agree with you from a technical view. When looking at the fundamentals I think Ethereum still has a long drop ahead of it. Consider the current market cap of ethereum is close to 40 billion. Ethereum has about 10,000 daily users if it's decentralized apps. Looking at price from a daily user valuation, we see that each user is valued at 4 million dollars.

If we look at an equity such as facebook, we see that the equities market has priced each daily user of facebook at $500. If this market decided to go by users of ethereum dapps as opposed to price speculation and if the market ended up valuing each user at $500 we would end up with each ether token being worth $.05. I'm not saying ethereum should be valued by number of users but at some point speculation ends and the market will want to see actual use of the product.
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@Smoak, Tesla, GM sold 9.6 million vehicles around the world last year, earning $12.8 billion on an adjusted pre-tax basis, while Tesla delivered 103,097 vehicles and lost $2.2 billion before taxes.

It's not really about GM at all. It's about Tesla's valuation, and Tesla's valuation has always been all about its story.

Tesla has had one of the all-time great corporate stories, inventing super-cool technology with near-limitless growth potential. That story has powered it to a valuation far beyond anything that is even remotely justified by its fundamentals.(https://www.fool.com/investing/2018/04/01/why-tesla-is-now-worth-less-than-general-motors.aspx)

Fundamentals is only one of many properties which is used in valuing equities
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You might want to add volume on to your chart. The recent down move had very large red volume bars meaning volume is picking up as price decreases.
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@mljones, When looking at the weekly, the recent rally was the first time, since Feb, buy volume exceeded sell volume on the subsequent sell-off.
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Thanks Marc. Sage advise as always :)
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I just realized that I have never disagreed with a single word you have written here on tradingview since I began reading around the summer of last year. It's all just so sensible and level-headed. Bravo my friend.
+3 Reply
majika TheChartmergeny
@TheChartmergeny, exactly my thoughts after reading this analysis / break down. nice level-headed summary .. @MarcPMarkets Bravo indeed ;)
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I have a question: When you do TA, do you look only at charts or do you take into account other factors such as mining? When looking at it from a miner's perspective I see alarming issues.
Let me explain: Mining is a complicated and operation based on a balance of difficulty/price of the coin mined. And since price follows difficulty (or at least it used to) then when the price goes up so does the difficulty.
That said, the more people mine a coin, the less coins they get but if the price is going up then their FIAT payout stays pretty much the same. If the difficulty rises but price goes down, then you are nearing the cost area and even going into the red since your output when converted to FIAT (usd/eur) is not enough to pay for operational costs and ROI of the equipment.
For ETH and BTC we are now in this zone! Have a look here: https://whattomine.com/asic and you will see daily "profits" of 0.51$/miner! If you account other OPEX such as ROI of the equipment (at around 3K $) and personel costs, rent etc etc, BTC is in the RED zone. So imagine the price of BTC going to $5K or even lower.... Similar situation is for ETH.
That effectively means that the "home" miners will stop/have stopped mining and only big mining companies can continue, although I cant say for how long as they would expect the price to recover so thay can make profit. If not they will go bust.
Mineable coins such as BTC and ETH cannot exist without miners....
So if investors/whales want to buy the coins cheap, we are at the bottom (or close) but if this trend continues we may go into uncharted territory for the future of crypto altogether....

What do you think?
+1 Reply
SriEdHorn llertas
@llertas, Mining difficulty decreases when the total hashing power decreases to make sure blocks will always be mined within reasonable time. So the more miners quit, the lower the difficulty would move, which could create an incentive for new miners to step in. Anyway it's unlikely that a price drop would bring the network to a halt.
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