This_Guhy
Short

ETHUSD with Hidden Bearish Divergence New Lows Incoming

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
First a primer on divergences:

Classic Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicator

The purple line is resistance that has been in force since early February and we see that the price action hit that resistance again yesterday. Additionally, we see that the indicators show we hit the price action with hidden bearish divergence on the daily chart , a very significant time frame. The RSI clearly has a new high to a lower high on the price while the MACD is only slightly higher presently compared to the high September 1st. The Hull MACD is showing a formation that typically appears when the price action is overextended and about to reverse, usually impulsively.

Ideally when we drill down to a lower time frame we would be looking for the top to have classic bearish divergence within it, indicating the trend will be reversing locally while continuing down globally due to the hidden bearish divergence. The chart below shows that we only have slight classic bearish divergence on the hourly time frame, which is usually not a clear enough signal to trade on by itself. Either the hidden bearish divergence will be strong enough to bring the price action down, or the price action will need to chop sideways and maybe double top before we can build up enough classic bearish divergence to see the bears maul the bulls. We may face a double top formation in the price action, or more subtly in the indicators while the price action appears to chop sideways.


Disclaimer on my position, I most recently shorted ETHUSD from 385 to 285 and closed my position while ETHUSD went to 265ish and then bounced out. I then longed from about 280 to 320 when I flipped back to going short because I did not expect this bounce to keep going. My short was in the money while we were at 195 and now I am holding bags while we are at about 240. I have bias to the short side and that is followed up with my money on the table so bear that in mind if you think that bias has affected my TA. Not Financial advice, so forth and so on. Unless we break the purple resistance line with some bullish divergence I am not closing my position, as I am gunning for a new low to get back in the money or (hopefully less likely) a retrace to take a managed loss.

I strongly recommend anyone here to read "The Ultimate Fud Post: There Fundamentally is no Bottom due to QT" to understand why I am so bearish on Fiat alternatives. The global money supply is contracting, strengthening fiat relative to the crypto and precious metals asset classes in particular, and to a lesser (put still severe) extent real estate. In particular, ETHUSD does not have the prospect of an ETF requiring a market cap of about $100B and therefore a price floor of $5,800. Even if you believe the notion that the floor of BTCUSD is at $5,800 there is the pragmatic fact that people would pull value from the other other cryptos to keep the value of BTCUSD up, and ETHUSD would still go down as BTCUSD continues to grow in dominance. And rememeber, even if you are correct globally and locally on your TA, if you go in over-leveraged you are still wrong.
Sep 28
Comment:

As I see the hidden bearish divergence being the controlling factor of this current movement I see a head and shoulders being formed as our top. This suggest the commensurate target of about 155 with some stabilization and then probably a lower low. With the way the price is slipping there is no way to know if we are consilidating at 155 for a few hours or a week before the next leg down resumes.

As we see the support below we can target the rock bottom at about $110.
Oct 11
Comment:
Things took a lot longer than I expected but we dropped out of the consolidation pattern with great affect. I think we will at least form a double bottom if now a new low. No guauarantee that the double bottom will be equal to the low of 167 but we should get close. When we do I'll be looking for signs of classic or hidden bullish divergence to predict an upswing. But that is in about 20 or 30 more dollars.
and no offense but your analysis is trash with the hidden bearish divergence cooling off from overbought absolutely cannot be compared with bearish divergence any bull market in the history of mankind has to have temporary rsi cool offs the ENTIRE WAY UP JUST LOOK BACK ON THE BULL RUN LAST YEAR IN ETH THE ENTIRE WAY UP THERE WAS RSI COOL OFFS on the short term time frames this is ridiculous a few weeks from today when we are trading over 350 dollars again your gonna be scratching your head thinking what the heck happened
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This_Guhy jordanmorin13
@jordanmorin13, If you want to go back and back up your statements with some charts I am sure that would be edifying for the both of us. But as the price action goes up and down and sideways these divergences build up and predict continuations if they are hidden and reversals if they are classic. You might want to consider that I am right and ETHUSD may have a double or triple bottom. You might want to consider ETHUSD might form an inverse head and shoulders. You might want to consider learning how divergence works because often counting Elliot waves significant bearish divergence sets in between peak 4 and 5 and then you will see hidden bearish divergence between peak 5 and peak B.

The 12h chart shows we continue to butt against resistance (I did tweak the line a tiny bit but we still have the points of contact going back to Feb). The Hull MACD is swinging down and the RSI has clear hidden divergence and it is also apparent on the MACD, but not as subtly. Volume is dropping off as we grind against this line and more likely than not we are going down, about 10-1. If you are bullish then you should be happy that the price will go down so you can accumulate some more.
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your are DEAD WRONG WE ARE GOING UP FROM HERE BOY
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This_Guhy jordanmorin13
@jordanmorin13, things do seem to be going down as I assumed they would based on the charts. I expect we will get to $170 or lower.
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@This_Guhy, expected consolidation after such a massive rally should absolutely only be 100% expected and is absolutely not a signal to be going down whatsoever we are still actually not even 10% bearish right now we are quite literally 90%+ bullish based on the charts reasons why? well more volume right now then the history of Ethereum EVER on top of that we are showing a lot of strength for the bulls over bears and the fact that we are correcting at 250 after a massive rally is quite literally something I 100% expected at the very moment we first hit 250 I literally predicted myself that we would rally to 250 and see consolidation for a few days and then continue upward I don't understand your logic at all and in a matter of weeks will be shut out
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@This_Guhy, if we do break below support of 228 with conviction THEN AND ONLY THEN WOULD I SAY WE COULD BE EVEN SLIGHTLY BEARISH let that be VERY CLEAR AND SINK IN SO FAR SUPPORT IS STILL HODLING VERY CONFORTABLE AT 230+ JUST AS EXPECTED WHICH I ABSOLUTELY DO NOT THINK WE ARE EVER GOING BELOW 228 ANYTIME SOON if we do then you can start saying we are bearish but until then we 100% aren't I mean we already dropped to low 230s we are so close but it just isn't going lower I can pretty much guarantee it
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This_Guhy jordanmorin13
@jordanmorin13, You seem more PASSIONATE than analytical or technical but we are clearly below 230. The hidden bearish divergence is visible on some high time frames. The 4d timeframe isn't standard but you can see the hidden bearish divergence there. We might get some bullish divergence in the lower timeframes but until we start to see bullish divergence on the 12H or 1D we are going down.
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This_Guhy jordanmorin13
@jordanmorin13, Breh how are you holding up?
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excellent analysis. the only thing biased would be your trend line (breached already on linear scale, which i presume yours is). I agree with everything else and share almost the same sentiment.
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@DocAMG, The scale is linear. I usually do mention which scale I am using, and I neglected to do so this time, so thanks for the reminder. And you will noticed that I used the thickest setting possible for the long term resistance line, and that has become something that I try to standardize in my charts. In the past I use to use very narrow lines and my stops were congruently very tight at resistance, but that ended caused my to get stopped out way more than I wanted as the price action thrashes around at long term resistance and support. Even if we wick in and about resistance I don't see us getting much higher. If we double top the formation will extend past the resistance line but the price is still dying.
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