Chartpunk Ethereum Brief #3
Ethereum is currently the mostly used smart contract platform out there, built on a decentralized, open source blockchain. The project has launched in 2015 and is today the second biggest blockchain platform by market capitalization. In this brief I will provide you with periodic technical analysis updates on Ether, the native cryptocurrency of the Ethereum blockchain.
HTF Market Structure
Ethereum is in an uptrend since late July, with consistent higher highs and higher lows. The bottom trendline of the ascending channel has just been confirmed by a confident bounce.
The bulls have a strong support in the 4050–4150 zone which is consisted of the July trendline support and the AVWAP level of the September 29 upwards push. The AVWAP level of the July uptrend is currently at 3340, which should serve as further support in case of any FUD events in the coming days.
If the bullish momentum remains confident, then my next price targets are the levels around 4500 and then 4800. If the 4800 level is confidently breached, then the price may rally to the channel midline of 5400.
LTF Market Structure
The low timeframe Ethereum chart is technically still bearish, but is showing signs of bottoming out.
The downtrend of November 10 is intact with consistent lower highs, the current trendline support of the bears is around the price of 4430. We have seen a bounce from the trendline yesterday, and the stochastic RSI is overbought on the 4-hour chart, so the bulls are showing exhaustion at this point.
The bulls however have tackled the AVWAP levels of both trendline touches of November 10 and November 15, so the zone of these averages currently between 4250 and 4330 should serve as a support for the bulls to regain power. If this zone could hold the price with some consolidation and some cooling of the overbought stochastic RSI, then the next bull push could tackle the downtrend for good.
Based on the above HTF and LTF market structures, currently the 4450–4550 area is the support of the bears and the 4050–4150 zone is the support of the bulls. Price action is currently influenced by the news of the new COVID variant, so volatility may remain with us in the following days.
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What is trend trading?
Trend trading is a market strategy that is reasonably different from swing trading or day-trading. A market “trend” is a tendency of a financial market price to move in a particular direction over time. Swing traders and day-traders are usually trying to pinpoint low-term market tops and bottoms, and take aggressive positions expecting to profit from a swift change of market direction. Trend traders are looking for consolidated and strong directions on a given market, and are trying to ride the trend for as long as possible. These traders normally enter in the market after the trend “properly” establishes itself. My core strategy in trend trading is to look for a market setup where the long time frame market structure is indicating a solid trend, and intact price action is supported properly by the low time frame charts.
What are my key indicators?
I am using trendlines, channels and moving averages to identify market structure and to spot trends. In crypto trading my core moving average indicators are the 50 and 128 daily moving averages. I am also using anchored volume weighted average price (AVWAP) analysis to identify support/resistance levels.
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