ETH β†’ Ethereum Falls Back to the Support Zone. Long or Short?

Ethereum retraced to the Support Zone, following the rest of the crypto market in a pullback. Now that ETH is on the Support Zone, can we expect a bounce?

How do we trade this? πŸ€”
I think it is probable that we get a bounce back up to the Daily 30EMA, but I do not believe ETH will break it. We may have witnessed the first leg down in a 2-legged pullback for ETH and Bitcoin. ETH has some long tail bars at the Support Zone, but with no good follow-through as of yet. It's reasonable to think the bulls will make an attempt to buy but with little momentum, which makes that Daily 30EMA ribbon an ideal resistance target as it previously acted as support.

The rejection at the 30EMA will likely bring the price back down to the Support Zone and with that many points of contact, increases the probability that the price will fall through. I expect that next support area to be at the Daily 200EMA of which the price will be around $2,000. The psychology of that even number being at the 200EMA after a 2-legged pullback in a bull market screams support zone target. Once we hit this price area, I am looking for a strong bull signal and confirmation bars to enter a long.

πŸ’‘ Trade Idea πŸ’‘

Long Entry: $2,080
πŸŸ₯ Stop Loss: $1,920
βœ… Take Profit #1: $2,240
βœ… Take Profit #2: $2,560
βš–οΈ Risk/Reward Ratio: 1:3

πŸ”‘ Key Takeaways πŸ”‘

1. Four legs up in a bull trend, final strong bull candle followed by a strong bear candle.
2. Contact with Resistance Area above $2,500
3. Strong Reversal Candle closing below Daily 30EMA
4. Likely to fall below Support Zone, look for Long Entry at Daily 200EMA
5. RSI at 40.00 and Below the Moving Average with a gap to fill, supports a slight pullback and then fall.

πŸ’° Trading Tip πŸ’°
The longer a trend continues after 3 legs, the probability of that trend continuing lessens. Because of this decreased probability, we ought to reduce our risk when entering trades.

⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!

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As expected, Eth has climbed back up to the Daily 30EMA and found some resistance. We now need to see if the resistance will hold and drive the price back down to the Support Zone and possibly beyond. If we break the Daily 30EMA it's reasonable to consider a long scalp, but I would be cautious about anything beyond that. We're still at the top of a bull run and the Weekly RSI is high around 61.00 and just below the Moving Average.

If we fall down to the Support Zone, look for support and possibly a long entry. I have my eye on the Daily 200EMA as the ideal support area for a long entry.

-Joe Dean
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