I would like to share this chart with you. It is the 6 hour chart of Ethereum ETH. You can see here an almost perfect trend channel over a period of more than 4 months. Interestingly, we have now reached the exact top of the channel with the latest rise in Ethereum. There is also a short but very steep trend channel in the larger upward trend channel. The Price has now converged with the short and long trend channel on the upside.
It is now good to watch what happens next. My idea is that there should first be a correction to the current sharp rise. So I am not a buyer of Ethereum at these levels now. I prefer buying at the lower boundery of the trendchannel because of a much better risk reward and less risk.
If Ethereum does break out further upwards I would certainly place tight stops to protect profits.
A next target for a breakout from this long-term trend channel would then be 4000 USD.
Please share your thoughts about Ethereum. Do you think it will have a correction or do you think it will break the upward trend channel and continues to rise. Please explain not only your view but more important the how and why!
In the past Ethereum was not able to breakout this channel so it is very interesting how it further develops!
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Note that the longer the trend channel is the more important it is. Especially when price respected the channel in the past. That is clearly the case here. My previous analysis was a shorter trend channel but after longer research I found this one and it seems even more accurate to me.
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The RSI is also overbought which predicted some strong response in the past.
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Something interesting is that we see again some sort of volume spike. The point is who is selling and who is buying. I think institutions always want to buy with a discount and they can easely manipulate the market and pump prices up. So this volume spike is almost sure the cause of traders buying. and big boys selling.
Would you go long seeing this chart as it is right now?
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Here an update for Ethereum. We can see price bounced back on the top of the channel which look to act like support now. We also see a hammer candlestick. The volume with the outbreak was higher than normal which is a good sign.
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Price could go higher from here because we already are now higher than the last all time high. First target is 4000 USD.
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Traders we are on the way for much higher targets! Happy trading!
@Henry_Ross, Thank you Henry! I am happy you like it!
Yuitz
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Looks like a good analysis - thanks for this idea. RSI is overbought on what time frame? 6H as your chart shows?
Ether2020
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@Yuitz, Thanks for the compliment! Yes on the 6 hour but also many other time frames. Ethereum has seen a tremendous rise in a very short time so if it can hold this level or rise even more... I have my doubts. A correction will happen for sure. Divergences in the RSI and other indicators are interesting but unfortunately, there is nothing 100% working all the time.
Yuitz
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It used to take 17 days or almost one month to make it 100% since 2/01 to 19/01 (700 to 1400$) or from 22/01 to 20/02 (1000 to 2000$). Gain speed right now is quite enormous.
Ether2020
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@Yuitz, Thanks for your comment! YEs that is very true. Ethereum has the attention now of bigger players. There is a lot of development going on and specially big banks and institutions are holding Ethereum. We can see parabolic price movement. Sooner or later the correction follows as always!
Yuitz
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On 21/04 correction finished at 2100$, do you reckon it could make nearly 100% gain within 10-14 days, up to 4000$?
Ether2020
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@Yuitz, It is very difficult to put a time on it. I personally believe Ethereum can go much higher but there will be corrections because the market moves in waves. The trend channel does give you a roadmap and the indicators like RSI and MACD can help with too much overbought in the short term. For example the moving averages. Price always comes back to it. The distance of the price from the MA also says a lot about the overheating of the price. When prices come back to the MA in a rising trend it is a good time to buy. But you can alsouse the trendchannel lines. Most important is to follow the trend. Counter trend trading can give high reward but the succes rate is very low. Follow the trend and buy the dips has an excellent risk reward. Never forget money management. When you do not risk more than 1% on your total capital and the RR is always bigger than 1 to 3 you will make profitable!
Yuitz
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@Ether2020, great explanation man, thanks. I'm in stock and forex for a while, I know MAs, SMAs, EMAs, MACD I use ADX and RSI also.