Ethereum Looks Really Ambiguous (Extreme Consolidation)
Its been a little while since we’ve looked at the blockchain project that essentially serves as the de facto ‘godfather’ for nearly half of the entire blockchain space.
Ethereum.
Let’s see what’s been going on with its price action in recent days/weeks/months.
From a panned out view on the daily resolution, there’s a large pennant (whether bullish or bearish is to be determined):
Zooming in closer to the most recent occurrence of the price interacting with the underlying diagonal support, we can see that the price fell just below the support for a period before being abruptly buoyed by the meteoric price action that took place in the crypto markets on October 25th/26th, 2019:
The questions that remain now are:
1. What does this mean for the price going forward?
2. Has the outlook flipped to bullish from bearish? (When the price fell below the underlying support, that was undoubtedly bearish)
Continuing Our Chart Analysis for Ethereum on the Daily
Moving forward, if we continue to chart the price action for Ethereum on the daily resolution following the bobbing price action around the underlying support point, it can be seen that the overhead diagonal resistance continued to be an impediment to bullish price action, even despite the bizarre market conditions on October 25th/26th.
Big Price Movement Due Very Soon, More Than Likely
If we ‘zoom out’ again, it becomes immediately apparent that the price is lingering right in the ‘apex’ of the triangular formation:
Typically, when the price reaches this point, one of two outcomes takes place:
Exponential Moving Averages (EMAs)
Sticking with ETH/USD on the daily resolution, the following can be observed:
As shown in the picture above:
1. The price is hovering right around the EMA-50, treating it almost as a perfect support point.
2. Bulls should not get too comfortable with the idea of the EMA-50 serving as support. It is far from impossible for the price to break below the EMA-50, and if it does, that could spell disastrous consequences for bulls.
3. Overhead resistance at $200 is posed by the EMA-200 ; this makes for a rather interesting scenario where the respective strengths of each EMA indicator (EMA50 & EMA200) may be put to the test going forward
Balance of Power RSI (BoP RSI ; Custom Indicator)
The Balance of Power RSI provides a fairly ambiguous reading for ETH/USD on the daily resolution:
By ‘ambiguous’, what we mean is that one could draw a bullish scenario for the chart above, while others may see a burgeoning bearish trend.
No party would be more right than the other because there are logical reasons that defend each position.
Thus, this indicator has limited utility in this context for our purposes (i.e., deciphering the ‘next move’ for Ethereum).
What Should Be Noted, However:
1. Disregarding patterns entirely, the Balance of Power RSI has experienced a net positive increase (substantial) since October 24th, 2019. However, the question remains as to whether that any of that sharp increase in buy pressure was due to a genuine shift in market sentiment or simply the lingering impact of the irrational bullish exuberance that gripped the markets on October 25th/26th.
2. The overall trending direction since September 27th, 2019, is positive (see below)
RSI(14) for Ethereum [H12 Resolution]
Readers should note the charts below showing the RSI(14) for ETH/USD are on the H12 resolution rather than the daily.
This was done in an attempt to gain a more definitive reading/interpretation, as the RSI(14) for ETH/USD on the daily resolution is just as ambiguous as the Balance of Power reading above.
See below:
As can be seen in the chart above (refer to the labels for name references):
1. Low #2 > Low #1
2. High #2 > High #1 ; Its worth noting, however, that the second high is just barely higher than the first high
When evaluating RSI, a series of increasing lows as well as increasing highs shows an underlying bullish sentiment/trend (and bearish in a vice versa instance).
Despite this fact, it is worth noting that the ‘higher low’ and ‘higher high’ were both produced with intermittent phases where the RSI(14) decreased substantially.
If the ‘pattern’/trend continues, then it is reasonable to expect that the RSI(14) will continue downward in the immediate future :
As mentioned many times before in other price analysis pieces, a downturn in the RSI (of any lookback period on any time resolution) does not always dictate a decrease in the price.
Many times a downturn in the RSI simply indicates impending or current price consolidation or a decreased ‘rate of change’ for bullish price action (i.e., the price can still increase even when the RSI itself is declining).
In this case, for Ethereum, the price has consolidated as the RSI(14) on the H12 resolution has declined.
See below:
The chart above shows price consolidation dating from October 30th to November 3rd.
Notably, when looking at the RSI(14), we can see that a firm decrease in its values from October 29th (first period of decrease from last period to current was on October 30th; peak occurred on October 29th, to be clear):
Looking Back at the EMAs Briefly
Its a bit more noticeable on the H12 resolution than the daily, but it appears that the EMA-50 (golden line) and the EMA-200 (maroon line) have established the support and resistance points of a ‘traded range’ (see below):
Reversion Ribbon for Ethereum (H12 Resolution)
Notably, the reversion ribbon is equally as ambiguous as the other technical indicators for Ethereum that have been covered thus far in this technical analysis report.
Double Guppy Channels
Price Action for Double Guppy Channels (H12 Resolution)= right down the middle of the ‘channel’ for the Double Guppy Channels; failing to reflect a bullish or bearish bias.
Conclusion
It appears that Ethereum is due to either cheat bull or bear at some point in the immediate future, that much is clear.
However, what remains uncertain is which direction Ethereum will decide on.
Due to the extreme consolidation, low volatility and volume for Ethereum over the past few days (since the flurry of price action on October 25th/26th), all technical indicators have remained relatively ‘mum’.
Thus, we decided to map out the known resistance/support points around the current price point (see below):
Below are two potential scenarios:
There’s obviously nothing more dissatisfying than a technical analyst that posts up a chart akin to what is presented above where the charted forecast essentially boils down to ‘it could go up or down’, but the most important takeaway from the chart above is not that the price could ‘go up or down’ (which will always be the case), but rather that:
1. The overhead resistance and underlying support, delineated by blue horizontal lines in the chart above, represent the most likely destination points should the price break upward or downward.
2. There isn’t much upside or downside to entering in either a long or short position (even with leverage), providing inadequate justification for an idea proposing either option at this point in time given what price information is available at the time of publishing.
If we look at the distance between the current price action and the underlying horizontal support and overhead horizontal resistance, respectively, we can see that the R/R is roughly even :
In the interest of retaining smart trading practice and habit in all ideas posted, there will be no idea submitted for Ethereum or forecast hypothesizing a bullish/bearish outcome.
Disclaimer: None of what was posted above is financial/investment advice, this is not a channel designed to give such advice or solicit investment into any product in the cryptocurrency markets. These are merely observations and insights that are pertinent and relevant to cryptocurrencies because of their inherently financial nature as innovations in the financial technology sphere
Additional Note: (i.e., one cannot assess the longevity of the Proof of Work mining model without assessing the price of Bitcoin, making cryptocurrencies a unique technological innovation that requires a more holistic assessment of what constitutes “financial/investment” advice. In this case, nothing that has ever been posted in this channel is meant as such.)
Ethereum.
Let’s see what’s been going on with its price action in recent days/weeks/months.
From a panned out view on the daily resolution, there’s a large pennant (whether bullish or bearish is to be determined):
Zooming in closer to the most recent occurrence of the price interacting with the underlying diagonal support, we can see that the price fell just below the support for a period before being abruptly buoyed by the meteoric price action that took place in the crypto markets on October 25th/26th, 2019:
The questions that remain now are:
1. What does this mean for the price going forward?
2. Has the outlook flipped to bullish from bearish? (When the price fell below the underlying support, that was undoubtedly bearish)
Continuing Our Chart Analysis for Ethereum on the Daily
Moving forward, if we continue to chart the price action for Ethereum on the daily resolution following the bobbing price action around the underlying support point, it can be seen that the overhead diagonal resistance continued to be an impediment to bullish price action, even despite the bizarre market conditions on October 25th/26th.
Big Price Movement Due Very Soon, More Than Likely
If we ‘zoom out’ again, it becomes immediately apparent that the price is lingering right in the ‘apex’ of the triangular formation:
Typically, when the price reaches this point, one of two outcomes takes place:
Exponential Moving Averages (EMAs)
Sticking with ETH/USD on the daily resolution, the following can be observed:
As shown in the picture above:
1. The price is hovering right around the EMA-50, treating it almost as a perfect support point.
2. Bulls should not get too comfortable with the idea of the EMA-50 serving as support. It is far from impossible for the price to break below the EMA-50, and if it does, that could spell disastrous consequences for bulls.
3. Overhead resistance at $200 is posed by the EMA-200 ; this makes for a rather interesting scenario where the respective strengths of each EMA indicator (EMA50 & EMA200) may be put to the test going forward
Balance of Power RSI (BoP RSI ; Custom Indicator)
The Balance of Power RSI provides a fairly ambiguous reading for ETH/USD on the daily resolution:
By ‘ambiguous’, what we mean is that one could draw a bullish scenario for the chart above, while others may see a burgeoning bearish trend.
No party would be more right than the other because there are logical reasons that defend each position.
Thus, this indicator has limited utility in this context for our purposes (i.e., deciphering the ‘next move’ for Ethereum).
What Should Be Noted, However:
1. Disregarding patterns entirely, the Balance of Power RSI has experienced a net positive increase (substantial) since October 24th, 2019. However, the question remains as to whether that any of that sharp increase in buy pressure was due to a genuine shift in market sentiment or simply the lingering impact of the irrational bullish exuberance that gripped the markets on October 25th/26th.
2. The overall trending direction since September 27th, 2019, is positive (see below)
RSI(14) for Ethereum [H12 Resolution]
Readers should note the charts below showing the RSI(14) for ETH/USD are on the H12 resolution rather than the daily.
This was done in an attempt to gain a more definitive reading/interpretation, as the RSI(14) for ETH/USD on the daily resolution is just as ambiguous as the Balance of Power reading above.
See below:
As can be seen in the chart above (refer to the labels for name references):
1. Low #2 > Low #1
2. High #2 > High #1 ; Its worth noting, however, that the second high is just barely higher than the first high
When evaluating RSI, a series of increasing lows as well as increasing highs shows an underlying bullish sentiment/trend (and bearish in a vice versa instance).
Despite this fact, it is worth noting that the ‘higher low’ and ‘higher high’ were both produced with intermittent phases where the RSI(14) decreased substantially.
If the ‘pattern’/trend continues, then it is reasonable to expect that the RSI(14) will continue downward in the immediate future :
As mentioned many times before in other price analysis pieces, a downturn in the RSI (of any lookback period on any time resolution) does not always dictate a decrease in the price.
Many times a downturn in the RSI simply indicates impending or current price consolidation or a decreased ‘rate of change’ for bullish price action (i.e., the price can still increase even when the RSI itself is declining).
In this case, for Ethereum, the price has consolidated as the RSI(14) on the H12 resolution has declined.
See below:
The chart above shows price consolidation dating from October 30th to November 3rd.
Notably, when looking at the RSI(14), we can see that a firm decrease in its values from October 29th (first period of decrease from last period to current was on October 30th; peak occurred on October 29th, to be clear):
Looking Back at the EMAs Briefly
Its a bit more noticeable on the H12 resolution than the daily, but it appears that the EMA-50 (golden line) and the EMA-200 (maroon line) have established the support and resistance points of a ‘traded range’ (see below):
Reversion Ribbon for Ethereum (H12 Resolution)
Notably, the reversion ribbon is equally as ambiguous as the other technical indicators for Ethereum that have been covered thus far in this technical analysis report.
Double Guppy Channels
Price Action for Double Guppy Channels (H12 Resolution)= right down the middle of the ‘channel’ for the Double Guppy Channels; failing to reflect a bullish or bearish bias.
Conclusion
It appears that Ethereum is due to either cheat bull or bear at some point in the immediate future, that much is clear.
However, what remains uncertain is which direction Ethereum will decide on.
Due to the extreme consolidation, low volatility and volume for Ethereum over the past few days (since the flurry of price action on October 25th/26th), all technical indicators have remained relatively ‘mum’.
Thus, we decided to map out the known resistance/support points around the current price point (see below):
Below are two potential scenarios:
There’s obviously nothing more dissatisfying than a technical analyst that posts up a chart akin to what is presented above where the charted forecast essentially boils down to ‘it could go up or down’, but the most important takeaway from the chart above is not that the price could ‘go up or down’ (which will always be the case), but rather that:
1. The overhead resistance and underlying support, delineated by blue horizontal lines in the chart above, represent the most likely destination points should the price break upward or downward.
2. There isn’t much upside or downside to entering in either a long or short position (even with leverage), providing inadequate justification for an idea proposing either option at this point in time given what price information is available at the time of publishing.
If we look at the distance between the current price action and the underlying horizontal support and overhead horizontal resistance, respectively, we can see that the R/R is roughly even :
In the interest of retaining smart trading practice and habit in all ideas posted, there will be no idea submitted for Ethereum or forecast hypothesizing a bullish/bearish outcome.
Disclaimer: None of what was posted above is financial/investment advice, this is not a channel designed to give such advice or solicit investment into any product in the cryptocurrency markets. These are merely observations and insights that are pertinent and relevant to cryptocurrencies because of their inherently financial nature as innovations in the financial technology sphere
Additional Note: (i.e., one cannot assess the longevity of the Proof of Work mining model without assessing the price of Bitcoin, making cryptocurrencies a unique technological innovation that requires a more holistic assessment of what constitutes “financial/investment” advice. In this case, nothing that has ever been posted in this channel is meant as such.)
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