vlad.adrian

Ethereum - The anatomy of a top

Short
BITFINEX:ETHUSD   Ethereum / U.S. Dollar
For more on my view about cryptocurrencies, check
Do cryptocurrencies have a real future? Yes. Does their price reflect their true utility? Probably not. This chart is not about the usefulness of crypto, or about the advantages the blockchain brings to the way we conduct business or go on with our lives. This chart is about pure mania.

Do I think you shouldshort Ethereum or any crypto currency? Of course not! Never underestimate crowd madness. I would love to buy long term puts, unfortunately, we are not there yet regarding syntethic instruments on cryptos. I do think however, that you would be better off selling any Ethereum you have, especially if you made a killing until now by buying it.

Now, looking at technicals, Ethereum looks like it is forming a top. On my bitcoin chart, I outlined a clear topping patter, which proved totally right. During this correction, Eth has fared quite a bit better than bitcoin , but I believe it is due to follow course soon.

After an important uptrend, however not too parabolic compared with other cryptos (and this is a huge paradox in my opinion, as Eth is according to my understanding, one of the best inventions, and definitely one if not the most important cryptocurrencies, with actual uses in the real world; note that this is only an outsider's view, with basic understanding of blockchain technology), Ethereum is drawing a topping pattern. It is not complete as of today, but it surely looks to me like an authentic H&S pattern with light volume on the right shoulder. If the neckline breaks, expect a more sever decline. If the major support area at 400$ gives way, we are in for an almost complete capitulation - 100$ is a realistic target!

I want to emphasize that this is not a short recommendation, as shorting it (and you have very few ways of doing that) does not provide a decent risk-reward ratio.

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