Ethereum looks perched on the precipice

Without doing any wild TA here you can see that ETH is interacting with a major trendline and a dip below here pulled by BTC price action could be extremely bad. On the flip side if BTC is forming a bottom then this could mean extremely positive buying opportunities. Generally, the entire alt market is watching for a BTC reversal so I'd avoid any positions unless you're buying on a BTC breakout or strong reversal pattern with other confirming indicators. Downside risk is very high due to both BTC downside risk and overall regulatory risk and the dampening of ICO markets. A regulatory green light for ICOs would be independently positive and could trigger an uncorrelated move but I think this trend will need some time to play out.

In general, most smart contract oriented alts are a "hold" right now until a few positive things play out.

Comment:

That's 8 consecutive negative candles on the 1 D chart. Or at least 7. There have been more than 7 consecutive negative candles in September and October 2017 and then prior to that we have to go back to 2016.

The other major trendline intersecting right at this price level goes back further to December 26, 2016 versus the one that goes back to May 18, 2017. That one has a steeper trajectory so it will be interesting to see what happens here.

I went and charted with Poloniex since ETH price history goes back to 2015 and you can see the next big trendline shows support around $100. This seems unlikely to happen without some kind of major shock so that's very low probability territory though holding one of these two trendlines would seem critically important.

Comment:

At this point ETH and the ICO market seems fraught with systemic risk which is why we've seen such a sharp draw down off the high after seeing fairly uncorrelated price action for a bit. Now, BTC will probably drive price action though holding one of these trendlines will be critically important regardless of what happens with BTC. Best to wait and see here as there will almost certainly be strong buying opportunities. Or, should BTC fail to hold its March 2017 major trendline then we could see ETH *really* fall out of the sky so a momentum breakdown based on a strong BTC price move below $7700 would be a solid opportunity for a short position.

Comment:

So the setup here would be:

Sell ETHUSD based on a breakdown of BTCUSD below $7700 after falling off the March 2017 trendline on strong momentum and other indicators at market price.

Should BTCUSD not move back to $7700 within the timeframe needed to reflect a breakdown at the trendline then this setup would be invalidated and a long position could be taken though that will need to be considered based on exactly what happens with BTCUSD. So far it's too soon to tell.

Comment:

In consideration of the previous trade I will say that I think the likelihood of it playing out is still low.

This is because:

1) there is huge money invested in crypto and blockchain
2) a move lower would send the entire market and billions into a bear market that could take a long time to recover
3) vested interests should and will very likely do everything in their power to turn this ship around before it takes on a risk of sinking and that more or less involves going heavily into BTC on the idea that a rising tide floats all boats, especially in crypto.

Comment:

So this is more or less a contrarian view that if it did play out, would be a pretty big gain.

But I don't think the major stakeholders in ETH would think a profit opportunity here would be good overall long term, especially since most are looking at the project as mostly immature tech, and it wouldn't seem logical to push a project with so much unfulfilled potential off the edge of a cliff.