2019-2-20 03:51 |
This price analysis was absolutely mandated after the extreme price action for Ethereum in recent days.
Thus, this price analysis will be taking a look at what’s happened to Ethereum over the past few days/weeks, and develop a forecast for future price action via technical and chart analysis.
Ethereum Price Analysis https://www.tradingview.com/x/7qMloU9w/The first thing that we must acknowledge is that Ethereum is up over 40% over the last two weeks, which is an astronomical gain for Ethereum.
When ‘scrolling out’ from the chart, we can see that Ethereum is getting close to its previous localized high, which occurred in early January in anticipation of the Constantinople hard fork (which was cancelled last minute):
In order to gain more insight on Vitalik Buterin-led Ethereum, we’re going to move to the daily resolution.
A Look at Ethereum on the Daily Resolution https://www.tradingview.com/x/LEuKjYaL/In the picture above, we can see that Ethereum broke a major, long-term downtrend resistance that had been established on May 5th, 2018.
From the picture above, we can also see that this downtrend resistance was very well-tested and that it occurred at a very sharp angle, making it a formidable resistance for the price action.
Volume Confirmation https://www.tradingview.com/x/fvQg0BRG/One of the telltale signs that a major downtrend resistance has truly been broken is a major spike in volume to accompany the breakout.
We can positively identify that there was a volume spike that correlated with the ‘breakout’ candle.
This is notable because this helps separate the difference between a ‘real’ and ‘fake’ breakout.
For those that are not familiar with this concept, below is an example:
Source: https://forextraininggroup.com/false-breakouts-fakeouts-can-profitable-setups/ Important NoteWhenever analyzing trendlines that span over several months with such a variable stretch of data, one must switch to the ‘logarithmic’ chart setting in order to properly account for the distortion of data.
For more information, please visit: https://www.investopedia.com/terms/l/logarithmicscale.asp
Support and Resistance PointsFrom here, let’s see if we can establish some notable support and resistance points for Ethereum.
https://www.tradingview.com/x/S8Ldn1rK/The first, and most obvious overhead resistance (from looking strictly at the chart), can be identified at $156 on the daily resolution. This marks the previous localized high for Ethereum.
https://www.tradingview.com/x/eaYBCtpv/In the chart above, we can see viable support at the $123 mark on the daily resolution based on a simple chart analysis.
Exponential Moving AverageThere is always a lot of information that can be gleaned about price action from the EMAs (Exponential Moving Averages). Again, due to the volatile nature of crypto (we just saw Ethereum jump 40%+ in two weeks), EMAs are the author’s preferred MA because they place ‘weight’ on more recent data points in a way that simple moving averages do not.
Source: https://www.investopedia.com/terms/e/ema.aspSo, let’s take a look at the Ethereum chart on the daily resolution.
https://www.tradingview.com/x/m88ufFsj/In the chart above, we can see that the EMA-12 (red line) has crossed over the EMA-26 (green line) on the daily resolution, which is a good sign of positive and strengthening price action.
The price is also above both EMAs, making these EMAs supports. The EMA-12 and EMA-26 for Ethereum are at the values $126 and $121, respectively. Which corroborates our earlier assessment of the $120-$125 price range serving as a support for Ethereum.
https://www.tradingview.com/x/CLKfPoZ5/In the chart above, we added the EMA-50 (golden line). The EMA-50, in particular, tends to have the strongest impact on price action for cryptocurrency on the daily resolution. So, this is one that is worth paying close attention to.
As we can see in the chart above, like the previous two EMAs that we looked at, the price has crossed above the EMA-50, which is a huge sign of price strength for Ethereum.
We can also see that the price successfully tested the EMA-50 for a few days before continuing upward, breaking past the long-term downtrend resistance.
The EMA-12 has crossed above the EMA-50 as well and it appears that the EMA-26 is curving upward to overtake the EMA-50 as well.
It is always bullish when EMAs with shorter look back periods are at a higher value than EMAs with a longer lookback period.
https://www.tradingview.com/x/SPicIgZv/In the chart above, we have added the EMA-100 (blue line) and the EMA-200 (dark red line).
Surprisingly, the price action for Ethereum has exceeded the EMA-100, which is a huge deal. The EMA-100 currently sits at the value of $139 on the daily resolution at the time of writing.
The EMA-200 is far off into the ‘distance’ at a value of $202. If and when the price reaches that point, this should be considered a noted overhead resistance.
Ichimoku Cloud for Analysis https://www.tradingview.com/x/mHiy5ZH8/Similar to Bitcoin, the price action for Ethereum has completely broken north of the Ichimoku Cloud.
The top of the Ichimoku Cloud should be considered resistance and it is currently holding a value between $125-$130 on the daily resolution.
Relative Strength IndexThe RSI(7) for Ethereum (daily resolution) is posted below:
https://www.tradingview.com/x/baoGSOaW/As we can see in the picture above, the RSI(7) is heavily in the overbought zone. But this, by itself, does not necessarily that the price action is due for consolidation in the near future.
Zooming Out to the H4 Resolution https://www.tradingview.com/x/5J4gZGaG/On the H4 resolution, the value for the RSI(7) is at 58.72 currently. Its plummeted pretty significantly and is in line with the current price action for Ethereum (thus, no divergence).
One Thing Worth Noting https://www.tradingview.com/x/9JYpcpEV/This is negative divergence in an unconventional sense (since we’re used to seeing the RSI make lower lows while the price increases), but it is negative divergence nonetheless.
Again, this is on the H4 resolution, so there are not major consequences for the price, but this should be noted.
Zerononcense Double Guppy Channels (Custom)The ZN Double Guppy Channels are screaming for a drop in the price action.
https://www.tradingview.com/x/jnsqvM9t/Going back to the daily resolution, we can see from the chart above that the ZN Double Guppy Channel indicator is screaming to us that the price for Ethereum is due for a correction to fit within the channel (orange portion).
ConclusionIt appears that Ethereum will lightly consolidate in the next few hours/couple of days before continuing its path ever upward.
There are several more points of analysis that were not included within this price breakdown for the sake of not rambling on about the price forever.
However, consolidation seems imminent.
Therefore, this is the author’s proposed trading idea (R/R):
https://www.tradingview.com/x/2ts8m3ST/Disclaimer: Nothing written about should be construed, perceived or accepted as financial advice. This is not written in advocacy of any personal finance strategies. The information above is simply an idea being promoted as an example of how one can form their own independent trading strategies. Whether the author has designated that they would place a long or short position or abstained from trading is solely their own prerogative; it is not meant to sway your own personal investment strategy.
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