Very nice call by @Steffro with the Head and Shoulders pattern. Looking at the 4 Hour Bar chart, the dotted blue lines represent both the neckline as well as the top of the Head and the top of the Right Shoulder. If ETH breaks the neckline, we look for a short in the distance of the height of the Head from the Neckline, which falls to about 490'ish. Where ETH broke the neckline was also a 3rd fail attempt at a rally to try to break the cloud, if you exited/cut exposure here, you were rewarded handsomely.
It's very interesting that the neckline is parallel to the long term ascending trendline in orange to which is also near the target short.
So where to now? After the initial drop ETH retraced and created a wedge that if broke, would target the $500 area. ETH did just that breaking to the downside, wonderful clear legs and decrease in volume on the bars, textbook. There was monster resistance around the 620'ish that helped create this wedge. Also to the downside there were many smaller support areas which helped prop ETH up on each leg, this was very very interesting to watch on the 15 minute bars.
The common denominator here is the long term trend line and the psychological $500 area as well as the targets by these past 2 huge patterns. If these are broken it's back to the races testing that $380 area that created a sound foundation back in April. The only support leading up to in its' way down to $380 is the $450 area.
Alternatively, EOS needs to be watched closely, as per reports, EOS is to cut it's dependence on ETH starting June 1st. If all goes well, there could be a very strong break out for EOS. So the question needs to be asked, are we seeing a coin rotation, are investors liquidating ether to hop on the boat of EOS for the longer term?
For now ETH is capped to the upside by the descending trendline in blue as well as the cloud, the cloud is certainly becoming thicker making resistance stronger. At the moment the momentum is not helping either as stochastics and MACD are showing negative divergence which was signalled almost 36 hours ago. RSI is already low, but with ETH, RSI can dip to mid teens before seeing a strong bounce.
Can there be a bounce, of course, the massive test will be the $550 area as that served the initial anchor before the retracement that created the wedge. I believe that will take a lot of buying and a lot of work to bring ETH back up to challenge $620ish area. Also at this point, it were to also challenge the cloud, it would be punished the first time around given how thick it is. If ETH can ride out and grind along the long term ascending trendline and move sideways, this can be very positive, while not only a base but the confidence to move higher.
It's very interesting that the neckline is parallel to the long term ascending trendline in orange to which is also near the target short.
So where to now? After the initial drop ETH retraced and created a wedge that if broke, would target the $500 area. ETH did just that breaking to the downside, wonderful clear legs and decrease in volume on the bars, textbook. There was monster resistance around the 620'ish that helped create this wedge. Also to the downside there were many smaller support areas which helped prop ETH up on each leg, this was very very interesting to watch on the 15 minute bars.
The common denominator here is the long term trend line and the psychological $500 area as well as the targets by these past 2 huge patterns. If these are broken it's back to the races testing that $380 area that created a sound foundation back in April. The only support leading up to in its' way down to $380 is the $450 area.
Alternatively, EOS needs to be watched closely, as per reports, EOS is to cut it's dependence on ETH starting June 1st. If all goes well, there could be a very strong break out for EOS. So the question needs to be asked, are we seeing a coin rotation, are investors liquidating ether to hop on the boat of EOS for the longer term?
For now ETH is capped to the upside by the descending trendline in blue as well as the cloud, the cloud is certainly becoming thicker making resistance stronger. At the moment the momentum is not helping either as stochastics and MACD are showing negative divergence which was signalled almost 36 hours ago. RSI is already low, but with ETH, RSI can dip to mid teens before seeing a strong bounce.
Can there be a bounce, of course, the massive test will be the $550 area as that served the initial anchor before the retracement that created the wedge. I believe that will take a lot of buying and a lot of work to bring ETH back up to challenge $620ish area. Also at this point, it were to also challenge the cloud, it would be punished the first time around given how thick it is. If ETH can ride out and grind along the long term ascending trendline and move sideways, this can be very positive, while not only a base but the confidence to move higher.