Hi friends! Welcome to this update analysis on Ethereum! Let's get right to it! Looking at the four hour chart, you can see that ETH continues to produce bearish formations on the chart. So, let's break them all down, piece-by-piece. Starting out, we have the enormous head and shoulders pattern (in pink.) It's pretty hard to miss. Next up, we have the downtrend channel (in blue,) which originates from the all time high. This channel has been like a steel trap for ETH, and any attempt to rally out of it has been unsuccessful. Next up, we have the head and shoulders formation of the right shoulder (in red.) That head and shoulders formation has produced a breakdown, which turned into a bear flag (in black,) and that bear flag has produced another breakdown, which has formed yet another bear flag consolidation (in purple.) The continuation series of bearish formations on this chart is undeniable, and when you break the chart down like this, you can clearly see that the entire chart is bearish.
Now, in terms of the huge head and shoulders formation, it's size and the distance that it is from zero, shows that this pattern has more than enough corrective potential, to send Ethereum to zero. In fact, this head and shoulders formation is so large, that a correction equal to it's full potential, would send ETH deep into negative territory. Now, I'M NOT SAYING THAT ETH IS GOING TO ZERO! I'm just highlighting the very real corrective potential that it has. Based on the size of the pattern, and it's distance from zero.
Looking at the current bear flag, you can see that it is building just above the neckline (in red,) which rests at about 565.84. The fact that a bear flag is building just above the neckline, increases the odds of a breakdown from the large head and shoulders formation. If/when ETH does break down, there are stair-step support levels on the way down, so it may be a controlled descent. The first support below the neckline, is the 78.6% retrace, followed by a support level at about 491.89, and then 385.20. Below that, we have the 100% retrace, and if that is broken, ETH could plummet back to the bottom of the channel, in the sub $100 level. So, you can see that the overall prognosis is not good.
On the MACD, you can see that it has formed a bullish crossover, while also forming a bullish divergence. We can see that momentum has been weakening, as the right shoulder of the large head and shoulders pattern has formed. However, these indications are not enough to mitigate the overwhelming bearishness of the chart. Furthermore, it is typical to see a decline in momentum, in the right shoulder of a head and shoulders formation, as traders move to the sidelines, in anticipation of the breakdown. MACD divergences are fickle indicators, and should only be followed if the formations on the chart concur with the divergence. Clearly, that is not the case for ETH.
For now, be on the lookout for a breakdown of the current bear flag, as the 20 EMA (in blue) begins to cross into the flag formation, increasing the likelihood of a breakdown. From there, look for a breakdown below the neckline of the large head and shoulders pattern. Good luck trading, comrades!
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.***
Hi man grate work, but their is an issue since every thing is following BTC it is most likely if BTC go's up ETH H&S pattern gets neglected, and currently their is a huge IH&S pattern forming for BTC.
TomShilleck
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@Chatra, You cannot assume such larger patterns so prematurely. It would be interesting to watch it develop, but its a very long shot
sethg12
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Ya ya ya, technical are bearish until Digix gold, Gnosis and Augur go live as Ethereum's first real killer dapps.
I think Gnosis and Augur will take time for adoption however Digix gold will be HUGE. Enter in the first ever 1 to 1 gold backed token EVER, this will be huge for providing a stable coin to avoid volatility, as well as give EVERYONE on earth easy access to purchase and store gold bullion securely. Cannot overstate how ground breaking something as simple as an asset backed token truly is.
Heads up, the trend is your friend, until it ISNT.
StaniecLukasz
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@sethg12, doesn't help that G20 meetings are next week
stuphilkill
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@sethg12, I share your excitement for DGX, it's a game changer. When the bond bubble pops (it's already showing cracks) the masses will flood into crypto, and a gold backed token will offer stability to those who do not wish to play market games. I'm stocking up on DGD for now.
radootoorcan
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Thanks for the analysis, Magic.
Just a question so it will be clear for me too. Why do we care about the ETHUSD TA and not the ETHBTC TA?
I mean, everything that happens on the ETHUSD chart is not actually directly dependent on what is happening on the ETHBTC chart in the first place? Or I am missing something?
mr.didgi
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@quasarnibiru, because alts are following the BTC's trend but they still have their own figures, patterns. I think this is the main idea.
BDG
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@quasarnibiru, Let me offer my comments while we wait for MPC. It is fine to compare ETH to BTC when one or more of them are going up. But when both are going down, I look at things differently. Imagine 2 people falling off the roof of a very tall building, seconds apart. The person who fell out last looks down and sees someone falling below him and says "Gee, I'm sure glad I'm not him!".