Ahoy traders! Today's analysis is all about ethereum and where it's heading next.
The whole market has been declining heavily and shaking people out of these markets. How to know when exact bottoms is in? There's no way of telling this and if someone is saying so, he is probably lying to you. But what can be done is to gather as many evidences as possible of a recovery.
[Social volume charts for cryptocurrencies https://solume.io]
Ethereum is showing bearish sentiment with declining price action and social volumes. When the sentiment is dying it often means that people are not finding it as a good investment and staying away from it. Moments like this often offers a great trading opportunity for contrarians.
The price hits second time low of this month and is back to support zone. As the price is back in the lows of this month it might look attractive to buy in again but as you may have noticed that stoch RSI shows that bearish momentum is still intact.
Before establishing a solid support here it needs to be tested few times and we have to see strong volume surge with a bullish reversal pattern that shows strength.
Ethereum is sitting at 0.786 fib level which is optimal reversal level and should be traded only with confirmed signals.
In other hand what if it doesn't manage to hold the support area and breaks below of it? Then it's likely heading to the next support level and support line of the pattern which can be found at $420. This is second optimal entry level and only should be traded with confirmed reversal signals!
Ethereum is forming a double bottom pattern in the larger scale and it's essential to hold this bottom because breaking below of the support level would invalidate this pattern. This pattern relies on expanded volume and once it reaches neckline (breakout zone) it should have enough of buying volume until then. Otherwise that breakout will lack confidence and will easily to be rejected. 0.382 fib level is playing important role on trend reversal as confirmed breakout would indicate the beginning of strong uptrend.
What should be expected?
The market is showing great amount of indecision and bearish sentiment is very strong. This is good trading opportunity for experienced contrarian and for those who are looking to scale in with small positions.
Recoveries often happens slowly and that's why having patience in here, is the key for everything. It's time to wait until volume starts expanding and it starts showing clear signals that supports upward movement.
It's not time to panic but to look for trading opportunities and confirmations on these patterns that are available.
Do you have some questions about this trade or the current state of markets? Feel free to ask down below and I’m more than happy to answer to them!
DISCLAIMER:
Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing anything.
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Cool, thanks for sharing.