In this idea, I will walk you through the three phases that Ethereum is going through right now and explain you why you could enter a long position that will yield you a safe 16% return.
Phase 1: Strong Correlation. We see very interesting behavior in this area when we compare the price of ETH/USD with BTC/USD. Both assets move in an almost 100% correlated fashion. Whenever one of the prices moves up, the other moves up as well. There might be a slight change in the amount in which it moves, but overall the direction is always the same
Phase 2: Divergence. It couldn't be more different in the second part of this chart. The price diverges very strongly. Even though on a smaller time frame we still see similar peaks and cliffs, overall we see that the price is moving in the opposite direction. BTC has increased with about 10%, while ETH decreased in value with about 10%
Phase 3: Convergence. What we often see when BTC is moving up extremely fast, is that everyone pulls their money out of the lower marketcap coins (including ETH) to put it all in BTC.
After the surge in price is over, we then see that the BTC Dominance is reducing again and while the price of BTC consolidates, all altcoins rise in value.
We have arrived exactly at that spot now. The spot of BTC consolidation in conjunction with altcoin increase. I see a bullish ETH here looking to find its levels with BTC again. I expect that the price converges again with the price of BTW, which means we're realistically looking at a 16% gain here for Ethereum
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- Trading Guru
-------------------------------------------------------------- Disclaimer! This post does not provide financial advice. It is for educational purposes only!
Hello my dear friend. As an analyst, I'm very happy to be able to help you with my analysis.
I would be very happy if you follow me and commenting on the analysis.
Trading-Guru
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@amirthetrader, Thanks for this! I will have a look at your idea and let you know what I think