Ethereum (ETHUSD) broke this week (chart on 1W time-frame) below its 1W MA200 (orange trend-line) for the first time since October 2020. The 1W RSI hit the lowest level ever recorded in ETH's history and by doing so, the price hit its Logarithmic Growth Curve (dashed line).
All this paint the picture of a strong Support Zone. However, there is a certain condition from Ethereum's last Bear Cycle that hasn't yet been fulfilled and that is touching the 0.5 Fibonacci retracement level from the moment the Parabolic Rally (green Channel Up) started. In December 2018 that was where the Bottom was formed. That parameter is now around $625. Interestingly enough it is exactly where the 5 year Higher Lows trend-line is. If the Growth Curve breaks, it is very likely to see the final bottom there.
Do you think the historically oversold 1W RSI is enough to accumulate buyers and prevent this?
Hey @TradingShot, I believe it depends on what happens to BTC as ETH tends to roughly follow it. If BTC winds up falling 80% from the last ATH (as it has done before) up around 69K, that puts it down around $13,800 for a bottom formation. If ETH tags along for that 80% drop, this would it put it down around $975, and with the slightly wilder swings it often experiences it's not hard at all to imagine it hitting $625. Not at all what we all hoped to see, but it's reality check time. The RSI is a lagging indicator even if it's an important one. Patterns often do repeat but I do not see them as valid trade signals, but rather as things that help verify valid trade signals and add weight to them. I believe from other things you've said since I've been following your work that's your approach as well.
I also believe that whatever the bottom turns out to be for them both (BTC and ETH), it will likely be a longer climb backup to the next ATH than it has been in the past. Possibly even 2-3 years AFTER the next BTC halving, which would put it out 2026-2027 sometime. That's definitely not a prediction, I'm just exploring my thoughts out loud here.
It is possible that it gets oversold on the monthly chart, which means there is more downside to go. The dollar will probably rise as interest rates are increased, putting negative pressure on crypto prices.
ZenFlo
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RSI in itself is an oscillator that moves with price, when you test it heavily, you find that a break of low boundaries can easily work as a sell entry, the trouble is big money is not looking at RSI, so as its own indicator on whether you should risk money here, I have to disagree, Look at July 2020 on your chart, RSI broke 70 boundary was that a good short? was Nov 2020 a good short? both times shorts would have been liquidated, so is this a good buy?
I also believe that whatever the bottom turns out to be for them both (BTC and ETH), it will likely be a longer climb backup to the next ATH than it has been in the past. Possibly even 2-3 years AFTER the next BTC halving, which would put it out 2026-2027 sometime. That's definitely not a prediction, I'm just exploring my thoughts out loud here.