Is Ethereum Headed for New Lows?

Data & Research / 21.12.2019

ETH/BTC Weekly 1

ETH/BTC Daily 1

From a higher time perspective it appeared that ETH/BTC was accumulating between 0.0188 and 0.0222 btc, before breaking the range low. Now, if price finds support at 0.01778 btc and consolidates within this range it would suggest that the accumulation phase has further extended between 0.01778 and 0.0222 btc. For the last four days Ether has been falling like a knife. ETH/BTC failed to trend higher – dropping 11% from 0.02 btc – following a rejection below the 50 and 100 daily moving average (DMA). Currently, price is sitting on support at 0.0178 btc, although there are no visible signs of a bullish reversal.

However, price may equally fall further to the local low at 0.016150, and if it breaks below this level would show ETH/BTC is still down trending and has not found a bottom yet. In both instances look for signs of a bottom forming before entering a trade.

A breakout with strong volume above the range high (and 200 daily moving average), and a retest of the resistance turned support would suggest that price has exited the accumulation phase, into a new bull cycle.

ETH/USD Weekly 1

ETH/USD Daily 1

Similarly to the price action of ETH/BTC, Ether’s comparative in USD has also dropped significantly. However, it has found respite in a relief bounce at $116 and a daily close at $122; if these levels hold, it would suggest price has found a local bottom.

This price level coincides with the lower boundary of the descending wedge which has been forming since the high of $361 in July. For this reason it is likely price found strong support here, because demand was attracted on one hand, from the wedge’s lower boundary, and on the other, from a previous resistance turned support level.

If price retests and falls through this support, it would invalidate the wedge formation and indicate that the market is not ready to move higher yet. This would be the most bearish scenario, and at that point it would (yet again) be judicious to wait for new a bottom before trading.

However, it is likely that price will reverse upwards and retest the wedge’s upper bound. But only if there is enough supporting volume is it going to break above and consolidate above the resistance, otherwise it is likely to be only a fake-out.

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Patrick is a third culture kid born to Brazilian parents, who enjoys reading, writing and thinking. He believes we need to be relentlessly improving models for investing in good ideas and moving them from the lab to the market, which naturally draws him to the cryptocurrency and blockchain space.