Chartpunk Ethereum Brief #5
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 has spent the year of 2021 in an ascending channel, and if you accept this as a valid structure then currently $ETH is in a buy zone for you. Price is trending down, and has reached the buy zone under the lower Fibonacci deviation line. According to linear regression channel trading rules, the range between $3900 and $3450 is for accumulation, with targets of $4300 and $4900.
The high time frame market structure is showing to us that price action is happening between the $3500 AVWAP level of the 2021 July uptrend, and the $4200 AVWAP level of the 2021 November pullback. Trend traders are not advised to open positions in between, as we do not know which trend will come out stronger, until a potential breakout in any direction.
Price is above the 200-day moving average, but under the 128, 50 and 20-day moving averages. Based on this fact, we can not identify long term direction currently. Confident price action above $4150 would be bullish and the zone under $3400 is clearly bear territory. The Awesome Oscillator is in negative zone and the RSI is trending down, which are negative momentum signs.
LTF Market Structure
The 4-hour AVWAP chart clearly shows how the uptrend of 2021 October has been lost, and how the price is trending down under all key AVWAP levels of the 2021 November pullback. The zone between $3800 and $4200 is key resistance area. Price action under that is bearish, and above that would be bullish.
Predator Chart Analysis
The high timeframe Predator chart is bearish. The indicator is cautiously long, however the price action is under the descending 20-period moving average. Confident price action above $4200 would be able to flip this chart into bullish mode.
The 1-day Predator chart is bearish. The 20-period MA is descending, and the price is under the MA level. Indicator is in volatility mode, which is not decisive.
The low time frame 8-hour Predator chart is bearish to neutral. Price action has been able to climb over the 20-perod moving average, but the MA line is descending. Indicator is cautiously bearish.
All in all, the Predator-based analysis is bearish. None of the key time frames are showing bullish momentum.
Trend traders of Ethereum should currently sit on the sidelines, waiting for key signs of market direction. The conclusion from the above different charts and timeframes is that the bull trend would return only in case of confident price action above the $4200–4300 area. Currently the high time frame market is showing no clear direction. Investors who follow the trading rules of the linear regression channels might open DCA longs between $3450 and $3900.
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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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The present article is a free material, for entertainment and educational purposes. Nothing in this post shall be considered as financial advice, you shall never make any financial decisions or financial investments based on a singly source of information and without doing your own research.