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Ethereum and Bitcoin Weekly Price Analysis

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Ethereum and Bitcoin Weekly Price Analysis

Introduction

This article was posted on Sunday, 13:19, UTC.

Ethereum

Ethereum continues to exceed expectations. As these words are being written, Ethereum’s daily chart is sitting at the All Time High set last June. It seems highly likely to break that ATH soon. Having said that, it should come as no surprise when/if at some point shortly thereafter it comes back down to test support at that point. But assuming that support holds, this trade will likely get rather fun.

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Regular readers will know I have been suggesting to readers for the past week or two that ETH is the trade to watch (see here and here) , and that has certainly been proven to be the case so far. I realize that many traders do not accept the possibility that geometry and other esoterica can be useful as a trading system. But regardless, it is still interesting to look at today’s markets through the lens of the work of some of the greats of the past. I typically use the Gann square (as developed by Eduardo Altmann) to model support and resistance. But in today’s column I will use a variety of other geometric tools to look at where price might go.

This Fibonacci Vortex (developed by Erik Beann) correctly forecasted the resistance at $13.5, and again more recently at $20.  As you can see, price has broken through the resistance pretty hard.  Barring an unexpected reversal later in the day with a close back below resistance, the next resistance shown on this setup is quite a bit higher.

A long-term Andrew’s Pitchfork correctly forecasted several recent support and resistance points in the current rally, as marked by the red arrows. What is more interesting is that the area highlighted in yellow marks forecasted support from the recent swing low. This point was clearly identified as a buying area.

But it is the green highlighted area that is the most interesting, in my opinion.  The “0 line” which caused so much problems (as expected) has yielded to buying pressure. This is not trivial. Indeed it is a buying signal on the daily chart.

A rather successful trader of yesteryear by the name of George Bayer made his fortune with the use of ellipses. My (rather rudimentary) understanding of his work is reflected in the picture above.

In this case, the ellipse shown above shows many places, highlighted with arrows, where significant S/R was forecasted by the ellipse. Whether it will continue to do so remains to be seen of course. However, it is worth noting that the top of the ellipse is $35, which happens to be in the same ballpark as the possible target area we identified in a recent column.

Suffice to say, we have seen more than enough to recognize that ETH is a market to watch and trade at this time.

Bitcoin

Bitcoin has seen some wild fluctuations in the past couple weeks. No doubt this was due in part to the anticipated launch (and then rejection of) a Bitcoin ETF.  I for one am very happy to hear that the ETF was rejected. In my opinion the existence of such a publically traded entity might have given the FED a narrow window through which they could exercise a degree of regulation over the cryptocurrency space, and that would have been a terrible development. (See here for more on that topic.)

In addition, wall street would have used such an ETF as a vehicle through which they would have been able to use fiat currency to (naked) short sell Bitcoin.  As the powers-that-be have the ability to create fiat out of thin air, they would for the first time be able to have a cost-free means to disrupt the cryptocurrency space. Of course, malevolent actors such as those found on wall street routinely disrupt the crypto markets already; but they can not do so without cost, as they must either mine, or buy the coins first.

It can be argued that they can already buy the coins without cost , since they create fiat out of thin air. That is arguably true, but the problem for them is when they buy the coins in bulk, they drive the remaining coins value ever higher. This inadvertently destroys the illusion that the coins are not a good investment. A classic catch-22. Regardless, I am happy that the ETF failed, though I’m sure opinions differ on this point.

Utilizing the Fibonacci Vortex again, we can see that the huge selloff in bitcoin  few days back came exactly at forecasted resistance.

The red arrows all mark where significant S/R was forecasted in the past, and the big blue arrow at the top shows where the selloff hit the vortex a few days ago. I’m sure there are many traders who bought the top who wished they had seen this picture LAST week…

This picture is decidedly bearish.  Before seeing this picture I was inclined to think we are looking at a good short-term buying opportunity at present levels.  Now I am not so sure.  I think I will pass on this trade and stay focused on ETH.

Remember: The author is a trader who is subject to all manner of error in judgement.  Do your own research, and be prepared to take full responsibility for your own trades.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Jim Fredrickson

Jim Fredrickson

Jim has an MBA from the University of Southern California. He has had a long career in both Corporate Finance and IT. Along the way he discovered that trading was a vehicle with great promise, but struggled for a long time without a mentor. After having been knocked down many times and having struggled to get back up, he had an epiphany and realized that geometry was a solution. He shares his experience here. If you do well as a result of suggestions made here, feel free to say thank you :) BTC: 1FUq3GB1Q8zz2JpuBr7YHzVBKnaWoxgmya Follow him on Twitter (@jimfred1276) or email him at jimfred1276 at gmail.

Comments
  • user

    AUTHOR tadej

    Posted on 9:21 am March 13, 2017.

    Hi Jim,

    Can we expect some significant pull back in price of BTC ? What is the bottom resistance on this graph?

    Friday was not a good day for me and I need to start to make better decision on my trades.

    btw I love your analysis!

    • user

      AUTHOR Jim Fredrickson

      Posted on 12:14 am March 14, 2017.

      I have been so wrapped up in ETH the past few days that BTC has been on a back-burner for my attention. I suspect that this is the case for a great many traders.
      I am VERY bullish longer-term BTC, but for the next day or two I personally would not put leverage in that market. I harbor a suspicion that it is not going anywhere until the ETH market peaks, and that is still a day or two away, I believe. Good luck….

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