ETH former resistance now support?

18 thg 10, 2022

I am a novice trader testing my knowledge against the market. Please don't use this publication as financial guidance. I write these as points in time to reflect on my original hypothesis. I do encourage comments and idea sharing, so please leave me a comment if you think there's more to discuss with my idea

Like most coins, it looks like ETH is following a falling wedge pattern - although I suspect this may be a false falling wedge. There is much trepidation with crypto, and the movement of DXY (will go into this in another post) and the general outlook on global markets keep rocking any positive trend we find in crypto amongst the cold winter and aggressive bears.

I wanted to dig into ETH off the prompt of an aggressively positive twitter post - one that felt very much against the general market sentiment and my own. My opinion on the coin is to stay out while looming recession news and bearish sentiment dominate, and the chart I'm tracking seem to read total uncertainty.

Looking into the daily chart for ETH, I noticed something of note: a former resistance point in Jun/July has now become a support line. The support forms the base of the wedge too. It's hard to determine what will tip crypto in one direction as many seem to feel that winter will continue through to November; however, a falling wedge is usually a bullish signal. I felt no improved confidence in deciding what to do from what I could see on the charts.

Generally, when I can't determine the market's direction through standard signals like support/resistance, moving averages, trend lines or volume, I look to an application called "intotheblock". Intotheblock is a data analysis and visualisation tool. It takes readily available data from various blockchains and exchanges. It represents them in consumable chunks of data (please note I'm not trying to shill the tool, I discovered it through TradingView and find it helpful when aiming to decide on market movement).

The general indicators that I look for are;

• how many wallets are in and out of the money,
  
• where the whales are (volume of coins held vs the number of wallets as a percentage),
  
• how the order books are behaving at the current price point,
  
• The visual spread is across the exchanges and a few less significant others.
  

Here are some interesting points of note (for me, at least) when looking at the data provided by Into The Blockchain;

Seven whales hold 28.5m ETH - or 28% of the total circulating supply; investors have ~16%, and about 58% is owned by retail; this is a heavily volatile indicator given that 64m ETH sits "outside the money".

Price points above $1350 and below $2700 seem to be the largest concentration of bag holders. This is an interesting metric because it could drive prices up or lead to a total dump - especially with the majority of retail investors who are far less level-headed and emotional - more so in these market conditions.

To add, I looked at social media sentiment during my dive into the metric mentioned above, and this is what I found:
- at this point, Twitter (probably the most influential site regarding crypto) sits neutral on ETH. Over the last seven days, 40k tweets about ETH were positive, 170k were neutral and 4k were negative. I wonder if this sentiment will align with the wedge ETH is currently moving through.

I want to note quickly that I try not to rely on fundamental analysis as it can be far harder to determine price movement on swinging emotions. However, these numbers help me try and rationalise the challenging landscape we are currently trying to navigate.

To close, I think the relationship between the former resistance line is somewhat relevant - I think it shows market strengthening. The question will be, is it enough, or will other factors crush the bulls' little hope remaining?