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Ethereum Price Analysis: ETH/USD Testing Key Support Despite ‘Expert’ Tom Lee’s Calls For Upside

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  • ETH/USD price action remains very much choppy, moving within an ascending channel pattern formation.
  • Last week, Co-founder of Fundstrat Global Thomas (Tom) Lee stated Ether (ETH) is poised for a major rally in the immediate future.

High Market Volatility

The Ethereum price continues to trade within a choppy formation. It has failed to commit to a sustained trend since the heavy bear market seen at the early to mid-part of September. From the 5th September price of $285, it dropped over 40% in value, to the low, $167 on 12th September. In just a 7-day period the price managed to significantly crash lower.

ETH/USD 40% price drop

These moves are still evidently seen not just in Ethereum, but across the market. There have been periods when the market saw excessive bull rallies, but these are quickly sold with some force by the bears. It continues to confirm how unsustainable trends currently are, just like with any market, however volatility across cryptocurrencies is certainly something else.

The crypto market is still very much a baby, within early stages of life. This is in comparison to other markets, such as stocks and bonds. There is still unpredictability about movements observed, in addition to lack of explanation. The erratic behavior may be observed for the foreseeable future, as the market continues to age. Specific calls of price targets in uncharted territory for cryptocurrencies are purely speculative and a wild guess.

Tom Lee Calls

Last week, the head of research at Fundstrat, Tom Lee, stated that Ethereum (ETH) is about to see a “trend reversal and rally strongly” up to $1,900 per token by the end of 2018. Further adding he “believes sentiment is currently overly negative on ETH.” Throwing in a caveat or an escape to his above call, he said threats to Ethereum include a “challenging technical picture”.

His quite absurd call is for a gain of around 750% in just over a year, plucking numbers out of the sky. This is unknown territory, given that Ethereum hasn’t even been above $1,500 yet. It peaked into the $1,400 region, on 13th January, before entering a deadly bear market. Lee appearing confident in his calls, which were put in a note and sent to Fundstrat’s clients.

This is the same gentleman who has been calling Bitcoin to be at $25,000 by the end of 2018. When most questioned recently, he reaffirmed his ludicrous price target for the largest cryptocurrency. Tom’s price call would need to see Bitcoin rallying around 200% within the next two months. A move towards freak territory, that was short of being seen during the large bull run, which peaked in December 2017.

Technical Review

ETH/USD price action is moving within an ascending channel pattern, as seen on the 4-hour chart. The formation commenced on 25th September and has been pushing higher, in a choppy fashion. Immediate support is observed at $224, where the lower part of the channel is tracking. A breach could see a very fast move back below $200 mark. Resistance seen at the upper trend line, around $244. Further north within $250-$260 territory is where supply can be observed.

ETH/USD 4-hour chart

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Pre-Market Analysis and Chartbook: Stocks Plunge as Chinese Rally Fades

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,713 -1.59%
DAX 30 11,282 -2.06%
WTI Crude Oil 67.72 -2.11%
GOLD 1,241 1.38%
Bitcoin 6,393 -0.20%
EUR/USD 1.1469 0.05%

The major global stock indices are all significantly lower today just after the US open, with several European benchmarks hitting new multi-month and multi-year lows after the recent bounce. Chinese stocks turned south after the strongest two-day rally in years, and although the local markets remain above their recent bear market lows, the shift weighed heavily on sentiment across the globe, with the Nikkei also getting below last week’s minimum level.

DAX 30 Index CFD, 4-Hour Chart Analysis

In Europe, the DAX is the weakest major index again, and German stocks confirmed the long-term breakdown that we have been following in recent weeks. Today, chemical giant Bayer is pushing the benchmark lower, but the weakness in auto-makers also continues to drag equities lower together with the struggling financial sector.

Spreads between Italian and core Eurozone government bonds are still wide, as the budget debate continues to pressure Italian assets, and despite the relative stability of the Euro, European equities are in deep trouble.

EUR/USD, 4-Hour Chart Analysis

The Euro is hanging on a thread above its monthly lows against the US Dollar, while the broader Dollar index hit a marginal new 2-month high today. All eyes are on the European Central Bank and Italy this week, and with the US midterms approaching, things can get wild in currencies in the coming days, especially given the rising volatility in equities, and the general risk-off shift.

While the EUR/USD pair is trading below the 1.15 level, the Dollar failed to show momentum against the common currency with buyers consistently stepping in near 1.1440. That said, the broader downtrend is clearly intact, and a test of the support zone near 1.13 still seems like the most likely scenario in the coming weeks.

S&P 500 Hits New Correction Lows as VIX Eyes 25 Level

S&P 500 Futures, 4-Hour Chart Analysis

US index futures had an ugly overnight session before the pre-market earnings dump, with the Asian selloff dragging the major indices lower. While the Nasdaq is holding up above its recent lows, the Dow and the S&P 500 plunged well below their multi-month lows, and the small-cap Russell 2000 also opened deep in the red, below its correction low as well.

Short-term technicals continue to scream sell in the US, with the weak bounce clearing the bulk of the oversold momentum readings with regards to the key benchmarks, and with market internals still being very negative. For now, we would still not buy the dip here, especially as we see no major positive divergences in global markets either.

VIX (US Volatility Index), 4-Hour Chart Analysis

Looking at the Volatility Index (VIX), the regime change that we were speculation on at the start of the correction seems to be confirmed, with the VIX getting back very easily above the line-in-the-sand 20 level. The index neared the 25 level pre-market, and although the panicky 30 level is still well above the current zone, a concerted move below the lows could spark a renewed surge in the VIX as early as today.

This leaves a protracted correction as the best-case scenario for US stocks, but as usual with bearish trends, violent counter-trend rallies are expected along the way, punishing late shorts and resetting the negative sentiment.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 380 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Coins Extend Weekly Losses as Altcoins Still Glued to Support Levels

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We are having another broadly negative session so far in the cryptocurrency segment, with most of the majors sporting limited losses, and with only a few coins showing relative strength. While the picture is far from being disastrous, we have seen some technical deterioration in the top coins, as Ripple is still bleeding lower, and as Ethereum fell below the $200 price level again.

DASH/USD, 4-Hour Chart Analysis

The likes of Litecoin, Dash, EOS, IOTA, NEO, and ETC are still weak from a technical perspective, and although some of the minor coins are still faring somewhat better, at least short-term, the overall picture remains overwhelmingly bearish.

Bitcoin’s stability is still a plus for bulls here, but with no sign of meaningful bullish momentum among the top digital currencies, traders should remain defensive even with regards to the relatively stronger coins.


BTC/USD, 4-Hour Chart Analysis

The most valuable coin is trading slightly lower amid the segment-wide drift lower, but the $6275 support is still well below the current level, and the volatility in BTC’s market continues to be very low. A move below would warn of a test of the $6000 and $5850 levels, and for now, the short-term sell signal is still in place in our trend model despite Bitcoin’s stability.

The next major support zone below $5850 is found between $5000 and $5100, while resistance is ahead at $6500, $6750, and $7000.

Ripple’s Weakness Casts a Shadow on the Market

XRP/USD, 4-Hour Chart Analysis

Ripple hasn’t been able to hold last week’s gains, and the coin moved below $0.46 this week, warning of a coming test of the $0.42 level, and a possible resumption of its broader downtrend after its surge in September.

Below $0.42 support levels are found near $0.375 and $0.355, and further weakness could soon lead to a downgrade in our trend model with regards to the long-term outlook, with strong resistance levels still ahead near $0.51, $0.54, and $0.57.

LTC/USD, 4-Hour Chart Analysis

Litecoin has been one of the stronger coins so far today, but from a broader perspective, it remains relatively weak and the $51 support level looks more and more vulnerable. A break below primary support would likely lead to a test of the bear market low near $47, with the next major support zone below that found at $44.

The broad declining trend is clearly intact, in the coin and traders and investors shouldn’t enter new positions here, with our trend model being negative on all time-frames, and with strong resistance levels ahead near $56, $59, and $64.

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to show relative weakness, and although remained stable in recent days, the broader setup hints on a likely test of the bear-market low. The coin drifted below the $200 level today, but volatility remains low, and trading activity is still very light.

The currency remains on sell signals on all time-frames, even as the immediate outlook is rather neutral, with key support found near $180, $170, and $160, and with strong resistance zones ahead near $235 and $260.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 380 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

Zcash (ZEC) Price Analysis: Market Cap Growth Continues, More Updates Coming Soon

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  • Zcash moves up to rank 19 on the top cryptocurrencies by market capitalization.
  • The Sapling upgrade just a few days away, as Zcash team suggest there could be more announcements soon.

Zcash (ZEC) continues to jump up the ladder, with its growing market capitalization. Last week it managed to creep into the top 20 cryptocurrencies, by market cap. Most recently, it has now moved up to rank 19. At the time of writing, it is seen at $624.5 million, ahead of VeChain (VET) with $612.6 million.

Countdown for Sapling Upgrade

It is just under 6 days now until the anticipated Sapling upgrade from the Zcash foundation. According to the firm, ‘Activation block 419200 will be mined October 29, 2018 01:31 UTC+00:00 assuming 150 seconds/block.’ The build-up of this is something that has appeared to be very supportive in the elevation of the ZEC price.

The Sapling is a network upgrade that boasts increased efficiency for transactions of which are shielded. They will facilitate broad mobile, exchange and vendor adoption of the Zcash shielded addresses. Zcash’s goal is to also see increased speed with these shielded transactions; it is touted that transactions can be shielded in less than 1 second.

New Announcements Coming Soon?

The Zcash team via their Twitter account have continued to count down their upcoming upgrade, tweeting “Is your product is #Sapling-ready? Or you would like to learn more about supporting the #Zcash Sapling upgrade? Reach out and let’s connect!” Within the tweet, they covered existing Salping-ready services listing; Bithumb, BitGo, Coinomi, Lamassu, Ledger, Suprnova, Trezor and WinZEC. They noted “MORE COMING SOON!” implying there are potential pending partnerships and integrations in the works.

Technical Review – Daily Chart

ZEC/USD daily chart

ZEC/USD bulls are on the hunt for an extended breakout north, as a vital trend line is being tested. A break of the mentioned resistance is seen tracking at $126. If a breach and daily close above, should open to door wide open to some buying pressure. The bulls will be met right away by some supply running from $130-133. As a result, sellers have knocked the price down throughout October, within this territory. Finally, for upside targets, a rally up to $145, would like then come into play. The price last traded here on 28th September.

In terms of support, this is seen all the way back down at $110. A lower supporting trend line can be observed tracking here. This has been active since mid-September. Furthermore, a buying area is noted from $100-95.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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