ETH May Reach $1826 after a Pullback to Consolidate

21 thg 1, 2023

Primary Chart: ETHUSD on a 2D Time Frame

The Primary Chart shows ETH's major down trendlines over the past 14 months. The first down trendline (magenta) remains effective and has contained price since the all-time high in November 2021. The second down trendline (gold) has been broken. The anchored VWAP from the all-time high (teal) is currently at $2230. Fibonacci levels are also shown on the primary chart, as well as major support and resistance levels from the past few months.

This is a short-term bullish idea. It's odd having a bullish idea in the crypto space—but this idea is very short-term. Despite recent progress, much more structural change is needed before bulls can call victory with a new primary degree uptrend. Bear markets commonly see multi-week and multi-month corrective rallies. SquishTrade is *not* calling a new bull market / long-term uptrend in ETH. To the contrary, this is just a corrective rally until the weight of the evidence proves otherwise. Down trendlines can break and be readjusted without a new uptrend being established, and inversely, up trendlines can break and be readjusted without a new downtrend being created.

In any event, long-term buy and "hodlers" should be careful here and use stops consistent with prudent / professional trading principles. If the time horizon is extremely long (forever) because you believe no other technology could ever possibly render ETH obsolete, then maybe you have inside information that does not require any caution whatsoever.

The key technical points are summarized below:

• The logarithmic down trendline remains intact currently. BTC's equivalent down trendline (on a log chart from all-time highs) has been broken, and it remains to see if that break will hold. It might hold for some time as the shape and structure of the downtrend is reestablished. The best the bulls can achieve, however, is a sideways to neutral trend for some time. Major bear markets do not typically reverse in a V-shaped fashion.
  
• Price is currently contending with a key Fibonacci level, the .618 retracement of the mid-August 2022 to November 2022 decline. This level lies at $1664.82.
  
• Price could push a little higher from here if it wants to extend a bit more. The move in BTC and ETH has been nothing short of explosive, typical in bear markets, likely fueled by shorts covering and a lot of upside hedging and FOMO. But in all likelihood, a consolidation / pullback is in the cards soon. See the RSI divergence (bearish) on Supplementary Chart A that has now arisen on daily charts. Divergences also appear in momentum on the 8-hour and 4-hour charts using RSI and other indicators, including the Bollinger Bands.
  
  Supplementary Chart A
• Because the November 3, 2022, high was broken, this sets up a shorter-term bullish structure potentially. The key word here is shorter-term. Again, this is not a call for a new bull market. But traders can try to capture upside moves with tight stops at logical supports. Right now, price is extended. Don't recommend chasing unless you really know what you're doing!
  
• If the down trendline (magenta) is broken, the measured move target is the more aggressive target for this move. That target lies at $2473. This target is not worth discussing, and not viable, unless and until the down TL from the all-time high is convincingly broken.
  

Thank you for reading this post.
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.

Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.

DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.

4 thg 2, 2023

Ghi chú

The first part of this forecast has been working. The pullback to consolidate. The second part—a push toward the down TL around $1800, has not been satisfied. Risk assets looked to be in an uncertain spot as of the close on Friday, 2/3. Max uncertainty for bears and bulls in major equity indices. = If long, tighten stops.

4 thg 2, 2023

Ghi chú

The original forecast still appears to be on track. ETHUSD has created a massive divergence on the daily chart. Wouldn't be surprised to see it push to one more high, then exhaust right when it meets major logarithmic downtrend-line resistance.

5 thg 2, 2023

Ghi chú

8 thg 2, 2023

Ghi chú

ETH's momentum continues to diverge. But the bulls are holding price above a key Fibonaccci level of $1550. But they haven't been able to break $1664 with conviction. Breaks above that fail.

It seems possible that ETH can push one more leg higher before exhausting this up move. Notice the angles of ascent in price. The initial angle was steep as momentum increased and price powerfully rose. Then as supply entered and buying pressure waned, the angle lessened. Two angles (blue lines with angle information) shown below:

8 thg 2, 2023

Ghi chú

The trouble is that ETH will likely exhaust and run completely out of steam right when it hits major resistance at this down TL. But bears should be careful here too. Perhaps wait for confirmation before shorting. Why? Because so many other assets have broken both log and linear down TLs in the past 2 months.

Here is daily RSI. Momentum continues to diverge negatively. However, if price pushes one final move higher, the RSI would spike again, but it's unlikely to spike above the prior peak from January, so this would be a more pronounced divergence rather than another smaller divergence in the current series of divergences (shown below)