Originally Posted On: https://btcmanager.com/ethereum-price-analysis-return-650/
Given the recent bear market that we’re in, it’s best to start off this analysis with an overview of the ETH/BTC chart to get an idea of how resilient it’s been to BTC’s downward movements.
Looking at Ethereum’s ether on the 8-hour chart, you can tell by the smaller red candles that volatility has minimized. As you can see from the overall chart, Ethereum’s ether has appreciated significantly in relation to bitcoin.
From the chart, it looks like we can anticipate several more periods of sideways movement. This means that the price of ether relative to that of bitcoin should be expected to remain stable over the next few days. Thus, if bitcoin rises in its USD price, so will ETH. If it drops, so will ETH. However, ETH’s drops may be somewhat more significant percentage-wise than BTC.
It’s important to note that red candles on this chart do not necessarily mean that ETH’s USD value is decreasing. Here’s the USD chart for ETH to give a better idea of what I mean:
Now, let’s evaluate the price action for ETH (USD) over the last few days with some of our indicators to get a better idea of how it’s moving.
We’re going to have to take some of these technical indicators with a grain of salt right because there’s a lot of general instability and panic present in the market at the moment.
As you can see from this chart, ETH has continued to trade within the zone that’s marked out by the two orange lines that have been drawn on this chart. As a general rule of thumb, such channels are usually prequels to a continuation in the trend (uptrend).
However, if ETH fails to break past the higher orange line ($1379), then it may be setting up to form a pennant. If it fails to break out of either of these trends and the price breaks south of the lower orange line, then a much sharper price correction could be imminent for ETH. This would also signal a trend reversal from up to down. ETH is still technically in its uptrend.
So What Will ETH Do?
The author anticipates the price will break south of that lower orange line (resistance), resulting in a trend reversal.
Because of the volume.
As a rule of thumb, if you see the volume decreasing while the price is increasing, you shouldn’t expect the price bumps to be sustained in any way. A drawdown from the price that ETH is at currently could easily send it southbound quite some distance. It’s been losing ground againt BTC as we saw in the first two charts, so even a reversal in BTC’s fortunes (which the author does not anticipate) wouldn’t preclude a sharp correction for ETH.
So Where Can We Expect Price to Go?
For this estimate, the best guess can be made by drawing some Fibonacci levels.
We can see it bounced off after a 50 percent retracement. However, in order to see whether it will trace one or two levels down; we will refer to the other indicators to get a better idea of movement. Remember, this is the 8-hour chart.
Williams’ Alligator’s position relative to the price makes the author feel as this coin is going to continue to go down in price. We don’t see it as having enough volume behind to truly trigger a signal on the Williams’ without it decreasing shortly following this.
Once again, please note that the volume has been decreasing, which means that when the volume does increase again (and it will at some point), prices usually continue their short-term trend. Currently, for ETH this is a downtrend.
I Thought You Said it Was In An Uptrend?
Overall, yes. Technically, BTC just broke it’s downtrend when it dropped below $9,000. However, there’s also a short-term trend that is the measurable trend in the last two weeks or so in cryptocurrency.
Accumulation is still high. Normally this is good when it occurs simultaneously with a decrease in price action because it confers the idea that investors are sticking to their ‘guns.’ However, this hurts in many cases because it shows that the impact of ‘panic selling’ has not affected the coin.
Basically what is meant is that the fact that there are a lot of holders of Ethereum means that the propensity for their to be a massive ‘dump’ of the coin raises. From what we’ve seen, individuals have been much more bullish on BTC than ETH. This is also evident by its appreciation in BTC over the last few weeks.
The orange line you see above is the EMA-200 for Ethereum. If the price breaks down below that, then you can expect to see a steeper drop. From what I’m looking at that’s been charted so far, I think it’s fairly realistic if not highly probable that such an event occurs, thus triggering further price action southward from that point.
The Bollinger’s shows the correction of the price from the outside headed upward. This, in conjunction with the fact that the price has bounced off the 50 percent retracement level with relative weakness makes the author really think that ETH is headed down very soon.
Overall, the author expects there to be very strong price action in the coming days when the volume picks back up that will send the price down to $634, and is very bearish on all cryptocurrencies. We think the lull in any news/updates/information that would drive the price of cryptocurrency upward on top of the fact that Ethereum is still in the midst of a greater retrace currently will both be the catalysts of this price drawdown to $634.
Before that happens it is plausible that the price (USD) continues to appreciate up to $100 or more first. Only a fool would enter the market in a long position from this point though.
Overall verdict: Bearish
Short/Rebuy Target: $650
Originally published at btcmanager.com on February 4, 2018.