360 on ETHUSD (Market Structure, Indicators, Longs and Shorts)

This post is a massive reversal of my bullish sentiment on ETHUSD over the last couple of months, so it is a rather lengthy post. In December ETHUSD doubled while BTCUSD consolidated in a tight range (30%, iirc) and then both retraced. I thought that ETHUSD would once again move to the upside while BTCUSD consolidated sideways and then when BTCUSD dumped ETHUSD would once again merely retrace. I no longer have the same long term bullish outlook on ETHUSD and in order to convince myself to change my long term bias I went 360 around ETHUSD.

The daily chart with the log scale showed a very disconcerting pattern for the bulls. We are in a pitchfork. At the very least we have 4 points of contact at the top of this pitchfork and two touches at the lower end, but both of those touches on support were at the pitchforks creation. The price action found support twice on the green -0.5 line twice. The most significant parts of this pitchfork have been the top and the +0.5 standard deviation line.

The price targets show if we test support in a flash crash and they paint a horrifying picture for the bears. Simple moving average analysis shows we are facing resistance with both the 50 and 100 SMAs and the 200 is way out of reach

If we step down to the 12h chart we see hidden bearish divergence on the RSI (price action has a lower high but the RSI establishes a higher high) and the MACD is divergent free but still on the verge of a bearish crossover.

Additionally, the 12h stochastic is slipping past 80 and the stochastic RSI has dropped like a rock. The tight price action suggests a large move is coming and the daily moving averages and the 12h oscillators point to the downside.

Looking at the ETHUSD Longs and Shorts we see that the longs are near all time highs again while the shorts are in a middling range. I have this perverse excitement that the longs will get squeezed past the rising support line that has developed over the last year. The high level of longs here looks a lot like the market is in denial about being in a new bull market. The dollar value of our longs is in the garbage, true, but the total number of ether long is higher than peak.The shorts are at an interesting significant level with at least 5 previous solid points of contact here. Seems reasonable to see this level as support for shorts and selling to increase, potentially forcing a long squeeze.

The VPVR looks like hell as well for the bulls. I set the visible range to the beginning of the massive upswing in 2017 and we can see that we slipped past the upper value area in August of last year and that suggest by itself that we will either return to the point of control or the lower value area. Considering we slipped past the point of control and are now facing it as resistance (in addition to all the other resistances we are facing at $120) a break up seems unlikely. An value area edge to edge trade puts us on target to the $75 target. IF we flash crash we reach that on the median line of the pitchfork but if we burn off over a month or so we reach it on the +0.5 level of the pitchfork. So forth and so on with the other targets in a month or two time. Also, the ATR is its lowest level in over 600 days so it seems to suggest a large move is coming. ATR doesn’t predict the direction of the move in a situation like this though. So we have a tight 5 days of trading while we are at resistance with multi-year low ATR. A big move should be coming soon.

In the unlikely event we actually break out of this pitchfork to the upside I would be looking for us to test the top of the pitchfork, turning long term resistance into support or test one of our recent highs as support before going I went long. I think the chance of break out to the upside under these conditions is basically single digit probabilities. Myy long term strategy on ETHUSD is now to be biases short until I see a long term/high timeframe reversal structure on the daily, like a inverted head and shoulders or a double bottom. A inverted head and shoulders means we establish a new low and a double bottom means we are either slightly above or below our last low in December with either hidden or classic bullish divergence.

Trade closed: stop reached:

It is times like this that I hate charting and posting to tradingview. I can't be correct if I didn't make a call but that is also the first step to being very wrong. ETHUSD has recovered a lot better than BTCUSD post pump and so BTCUSD is acting like I thought it would, but ETHUSD seems to be de-coupling. Which is annoying because eth and btc move together over 90% of the time. IF ETHUSD goes up and BTCUSD goes down a ETHBTC trade would be very profitable.

This bullish inverted head and shoulders has taken us to the log resistance line and is either in the process of dying or negating my post above. We are punching through the 50D but have not closed above it, which is something to watch. The RSI might break through the cap at 60, an the Stochastic RSI is finding support at 80.

The longs are beginning to look like they are in an ascending triangle. I don't know if you can really do TA on Longs but I do know that just because we are near an all time high it does not guarantee a pull back. You cannot set a new all time high without breaking the old one.

We have also slipped passed the point of control show in the last VPVR chart which suggest a move from here through a low volume node to a high volume node. An intermediate place for price action to stall out/consolidate shown on the cart at about 150 and 190, and 290.

This trade went edge to edge on the ichi-cloud before dying. We did that the last time in January but we were unable to hold the cloud as support for 3 daily candles, which is a decent measure of support for crypto. The last time we were above the cloud for 3 days was 10 months ago and that still ended bearishly.

I am really looking at controlling emotions and doing a technical trade as this isn't the for me to get sloppy. The technical swing trade is to ride the inverse head and shoulders to target after price action clears the neckline. The longer term trade is to go long after support is found on the cloud/50SMA/Log line after it turns to support.

This would happen less than a day after I make this massive post about changing my point of view. Really salty about that. But at least if I am wrong alt season is upon us.