Candid Analysis — Head on The Chopping Block — ETHEREUM! (ETH)
Hello friends! Well, I'm about to stick my neck out there on this one. Before we jump in, I have to tell you the truth. I've been reluctant to review ETH, because it gives me mixed signals. Sometimes, the technicals aren't always extremely clear, because markets can occasionally move in erratic ways. However, after some in depth thought, I think I have formed a conclusion on ETH. As with all other analyses, this is CONDITIONAL! That means that for X to happen, we look for A, B, and C to occur first. I've had some responses from people accusing me of essentially using vague wording in my analyses, and using if/then arguments as a crutch. People who formulate those arguments, clearly don't realize that ALL technical analysis is based on if/then arguments. We (analysts) assess the charts, and form a conditional, technical opinion. I have no problem shifting or abandoning my prior analyses, if new developments justify it. That's one of the qualities that makes me a powerful analyst. With no further ado, let's take a look at Eeth.
As you can see, I've made a few adjustments to this chart. Let's begin with the original triangle that I had (in solid black.) We can see that it did break to the upside. It rallied up, met resistance, and turned lower, eventually breaking down from the extended lower level of the original triangle. Seeing this type of action has made me believe that we have just formed a larger triangle (black dashes.) Additionally, I believe that we could be forming a head and shoulders pattern, with a currently nonexistent right shoulder. I have drawn a hypothetical head and shoulders pattern on the chart, so that you can see the possible formation route. We have clear overhead resistance, which could send prices lower, to form the right shoulder, so I think it is a plausible scenario. Going back to the larger triangle formation, you can see that volume has been on a steady decline, during the entire formation. This shows that we are in a larger triangle, which has persisted beyond the original, because volume typically declines through the entire duration of all triangles. The breakout location is in line with a typical triangle breakout (usually around 75% of the duration of the triangle.) Also, we can see that price action is sort-of returning to the apex, which is also very typical of triangle breakouts, before the actual fall or rally occurs. I've pulled a quote to be more specific...
"Return to Apex: After the breakout (up or down), the apex can turn into future support or resistance. The price sometimes returns to the apex, or a support/resistance level around the breakout, before resuming in the direction of the breakout."
So, therein lies the problem! Looking at the smaller triangle, did we just return to the apex support (in orange,) and we're now heading higher, in the direction of IT'S original breakout? Perhaps. Perhaps my larger triangle is BS. Let me tell you what we do, when we reach a crossroads in our analysis like this. We rely on conditions! We use X=A+B+C. For X (large triangle breakdown) to occur, we need A (the falling dashed trendline) to not be surpassed, we need B (the orange apex level) to be broken, and C (the low formed on the large triangle breakdown) to be surpassed. Those conditions, will solidify the large triangle breakdown theory, and that would put the downside price target around 500 bucks. Miraculously, that's insanely close to the 100% retracement, suggested in many of the other charts I've been reviewing.
A sustained breakout, above the apex of the large triangle, or the upper dashed trendline, would probably invalidate this analysis.
This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-MPC loves you-
-JD-
As you can see, I've made a few adjustments to this chart. Let's begin with the original triangle that I had (in solid black.) We can see that it did break to the upside. It rallied up, met resistance, and turned lower, eventually breaking down from the extended lower level of the original triangle. Seeing this type of action has made me believe that we have just formed a larger triangle (black dashes.) Additionally, I believe that we could be forming a head and shoulders pattern, with a currently nonexistent right shoulder. I have drawn a hypothetical head and shoulders pattern on the chart, so that you can see the possible formation route. We have clear overhead resistance, which could send prices lower, to form the right shoulder, so I think it is a plausible scenario. Going back to the larger triangle formation, you can see that volume has been on a steady decline, during the entire formation. This shows that we are in a larger triangle, which has persisted beyond the original, because volume typically declines through the entire duration of all triangles. The breakout location is in line with a typical triangle breakout (usually around 75% of the duration of the triangle.) Also, we can see that price action is sort-of returning to the apex, which is also very typical of triangle breakouts, before the actual fall or rally occurs. I've pulled a quote to be more specific...
"Return to Apex: After the breakout (up or down), the apex can turn into future support or resistance. The price sometimes returns to the apex, or a support/resistance level around the breakout, before resuming in the direction of the breakout."
So, therein lies the problem! Looking at the smaller triangle, did we just return to the apex support (in orange,) and we're now heading higher, in the direction of IT'S original breakout? Perhaps. Perhaps my larger triangle is BS. Let me tell you what we do, when we reach a crossroads in our analysis like this. We rely on conditions! We use X=A+B+C. For X (large triangle breakdown) to occur, we need A (the falling dashed trendline) to not be surpassed, we need B (the orange apex level) to be broken, and C (the low formed on the large triangle breakdown) to be surpassed. Those conditions, will solidify the large triangle breakdown theory, and that would put the downside price target around 500 bucks. Miraculously, that's insanely close to the 100% retracement, suggested in many of the other charts I've been reviewing.
A sustained breakout, above the apex of the large triangle, or the upper dashed trendline, would probably invalidate this analysis.
This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-MPC loves you-
-JD-