Hello all! Welcome to my first Technical Analysis on ETHUSD! I have seen a lot talked about the BTCUSD chart and feel that there is a lack of in depth TA on ETH. To address this shortage, I propose a potential long entry into ETH with clear targets and stop losses.
In the chart above, notice the trend line in blue that has acted as resistance first at 5-20, then again around 6-08 and 6-20. This monster trend line was finally broken around 7-02. Such a strong resistance line did not break with significant volume or conviction, thus it must be retested to verify that that it now acts as support. This is a the trade that I propose to you now.
I suspect that this retest will indeed hold, and as such I've entered a long position at the current price. The stop loss is obvious and clear at the low of today's price action, exactly where the trend line has been tested. The since the rally from 6-29 has already broken the resistance level of 480, on the way back up, I don't expect this level to act a hard resistance. The next overhead resistance levels are the previous touches on the trend line, around 540 and 600 (key psychological level and matches the 50% retracementof the whole bear move). These will be our take profit areas.
ETH is undoubtedly correlated to BTC, but BTC hasn't returned to bearish quite yet! A completion of the BTC correction could yield a bull rally (no not to all time highs, but potentially to the mid 7000s). If such a rally takes place, these are the levels in ETH that we should be watching.
Further evidence:
Additionally, you can see on the chart above that we have had a divergence in the RSI and MACD that started on 5-28 on he 12 hour chart. The 12 hour RSI met resistance at 60, as is expected coming from a bearish market. Nevertheless, if we hold onto our current levels, we can surpass 60 on the RSI with a potential oversold at the $600 level.
Furthermore, as can be seen in the chart above, the 4 hour RSI is in the oversold territory and at a support trend line that begins on 6-11. Oversold RSI's on the 4 hour can either signal a potential bounce opportunity or the re-initiation of our bear market. In case it's the latter, we have a stop loss in the 425 region.
The next piece of evidence is the parallel bullish channel that we have just formed using our three tops from this most recent rally (see image above). This again suggests that we're moving up, even in the short term. The channel also gives us an improved stop loss at around 425 for a bullish wick through the bottom of the channel.
The counter case: The counter case is obvious- it is the reactivation of the bears. The first sign would be if we take out our 425 stop loss. At this point I would not enter a short as we are still over extended to the down side. A good shorting opportunity would be a break of 2 month low at around 405 or if we retrace and fail to break out from the 495 area. A break of 405 would yield a high probability short. If this post gets enough comments and likes, I will present a full bearish case as well, with clear short entry levels.
Please comment and like to let me know if this analysis was helpful and if it's something that you would like to more of.
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As of writing this, we have a bull wick event (see chart below). The price fell past the channel, onto new recent lows (but not to our stop loss!). However, it bounced right away from those prices. This indicates that the bears have stepped aside and let the bulls into the pin. If you're not already in this trade, now may be a good time to enter, even if only looking for a short term bounce.
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This wick came about $0.34 shy of our stop loss. Now that’s a stop loss.
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Are you still following along? We have made a series of lower closes, but currently doing better than BTC! BTC dumped down, but we help up and still have NOT hit our 425 stop loss. Also, now we have divergence on the 4 hour chart, suggesting that a bounce is coming sooner rather later (see chart below). Additionally, we have further confirmation with divergence on the CMF.. I believe in CMF divergence more strongly than RSI divergence since CMF is giving you signals of actual volume slowing down on the down side. But most importantly, we are seeing wicks rejecting the downside on dumps, and even when BTC dumps ETH is holding up. If/when we do bounce, in the short term we have to respect the strong support/resistance at the 455 level, highlighted on the chart. If you are planing on entering this trade now, you may want to take some profit at the 455 level, or swing trade at this level.
$455 might also be a good place to enter a short if you disagree with my analysis and believe more downside below 425 and 400 is coming. A great strategy in a short term bear market is to short every 15 min overbought RSI and close when the 5 min RSI is oversold. If it's a stronger bear market, switch to lower time frames for the same strategy (like 5 min overbought short entry and 2-3 min oversold close). If we chop sideways, you can use these strategy pairs with 30 min - 10 min or 1 hr-15 min. Let me know if you have any questions!
https://www.tradingview.com/x/NM3kVwg5/ [\image]
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Hello all, sorry for no update over the weekend. Yes my stop loss was hit, however when the price bounces right back to the purchase, in a strong move, I consider it a rebuy. Thus I was back on this trade over the weekend. We now are testing our 470-480 break down area. This is a good sign but don’t expect a clear break since we are already over extended in the short term for this bounce. Expect some consolidation before a break
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Hello all, please see my updated post, if you're still following along.
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I just wanted to mention this image I posted earlier worked out almost exactly https://www.tradingview.com/x/YK3ampFR [\image]
https://www.tradingview.com/x/tDYwqQxS/ [\image]
Ok maybe the timing was a little off but I must say, the channel resistance has worked out perfectly
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Here is how it actually did play out (note my stop loss was hit, but then I reentered)
Great Analyisis, spot on. Testing critical support levels of 450-470. ETHBTC however is crashing hard and testing critical support as well. Some thing to watch out for.
How do you post the chart images on the updates? I can only get it to display the link, not the page. I have a similiar idea posted on July 12.
@farhankam, Thank you. I tried that in the past and didn't work. Should have tried again before I asked. Got It. And you have a new follower!
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I agree with this one. Your stop-loss is a bit tight for my taste, but that's your strategy. :) However ETH and BTC are highly correlated (compared to USD), so we must keep an eye on that too.