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Analysis: Monday Morning Massacre for Ethereum

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Bitcoin

Bitcoin finally succumbed to the selling pressure we have been forecasting for the past few days.  All things considered, the selling has been muted and reasonable, far more so than I expected.   This sentiment may be premature of course.  There could be another shoe waiting to drop.  But I note that a 5th arc on a 15 minute chart has (so far) stopped the decline, so I lost my bearishness  at the arc. I sent a tweet at the time.

Ethereum

Editor’s update: Ethereum’s flash crash only happened at “Kraken” due to a DDoS-attack.

Ethereum was a massacre.  The selling took out every leveraged trader I am sure.  Prices took a nosedive to $30 in a manner I briefly described in yesterday’s column. Short-selling, stop-running, margin calls and panic crushed a lot of people. I hope my leveraged readers were smart enough to take my advice and lighten their leveraged positions yesterday.  If not, they saw their dreams dashed a few minutes ago.

I believe the low is in at $30, but there could be another show left to drop.  It seems unlikely though, because the margin calls have already closed everyone out and the stops are cleared also.

Litecoin

Litecoin hit our target of $30 and has sold off a bit since then.  Given the selling going on today, it may still correct pretty hard as well.  Beware…

ETCUSD

We suggested that ETC might correct to the $5.50 area. At this writing we have a low of $5.17.  It seems like a low might be in, but it is hard to say.  The bears are in full control this morning in a coordinated attack across the spectrum.   It’s hard to say where any of it will end.

Overall, it’s a good morning to be either  in cash, or short.  There will be some great buying opportunities soon, but be careful!

 

 

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

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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5 stars on average, based on 2 rated postsJim 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.




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30 Comments

30 Comments

  1. eko6321

    May 8, 2017 at 6:38 am

    Hello Jim

    What happen to ethereum last night it was scary I be honest. Do you think can we hold ethereum or we sell.
    Or where we setup trailing stop limit.

    Please advice

    • Jim Fredrickson

      May 8, 2017 at 7:27 am

      I don’t like anwering such questions because I don’t know your situation. It WAS scary, but imho the selling is over for now. Me? I would hold here…

  2. [email protected]

    May 8, 2017 at 6:59 am

    Hi Jim, I can see ETH is around $90 on GDaX and Coinbase and BTC near $ 1650. Which exchange you are referring for the prices?
    Also, I am heavily invested in LTC. Should I exit since it’s near$28.9 now?

    • Jim Fredrickson

      May 8, 2017 at 7:40 am

      I use kraken. My prices are the ones that exchange registers. LTC is still a good asset, imho…

  3. jedadoo

    May 8, 2017 at 7:14 am

    I’m a bit confused. Eth holding at $90+. I see some comments on polo about kraken being hacked. I pulled my Eth to a local wallet to prevent myself from selling it quickly 🙂

  4. iamniks

    May 8, 2017 at 7:14 am

    Any thoughts on XRP?

    • jedadoo

      May 8, 2017 at 7:15 am

      He gave some a few days ago, saying ti may triple this summer. Looks like it may sooner than that… I’d be interested in STR. Had a HUGE day at polo. Didn’t get in, but thoughts would be good.

      • iamniks

        May 8, 2017 at 7:16 am

        As I remember the goal was 0.2 which was today in the night:)

  5. Gabriel

    May 8, 2017 at 7:28 am

    Each exchange has different prices, because different people agree on different prices, depending where they trade. This leads to certain arbitrage opportunities. The prices seem to be mostly from Kraken aren’t they?
    My personal opinion is that it is best to invest broadly, and buy each coin after much research, to see if you would still be happy holding it one year from now (you may like the tech, etc.). That way you will benefit from the global rise of the crypto markets. Trying to always chase the fastest horse and switching all the time is too stressful, and also makes it hard to track your results.

  6. foryou

    May 8, 2017 at 8:39 am

    Hy, Jim,

    Seeing the ETH scary situation yesterday, I sold my holdings because it was well over my cost! I mostly do short term trading so that way it works for me.

    1. ” why do not you cover other potential AltCoins like Strat, Pink, SYS, Factom, …etc ? ” May be you do not want to confuse your followers but it would be much appreciated if I get to read on them as well. I see that there lots of money in these coins. I saw someone asking this in a comment under a recent post you made but you did not reply that!

    2. Any buy signal for now would be helpful.

    Will appreciate your reply on this.

    I have recently subscribed to your recommendations, it has been a good experience so far.

    Thanks 🙂

    • Jim Fredrickson

      May 8, 2017 at 11:56 pm

      Hi, I am stretched thin trying to cover the few coins I actively cover already. Also, I trade on Kraken so charts on kraken are the ones I most easily see. Which exchange lists those coins? I will look into it.

      • foryou

        May 9, 2017 at 12:25 pm

        Poloniex. Do have a look, covering around 10 coins would be good. I have been closely watching them and made good money too. Your expert advice would always be helpful for everyone here. Thanks

  7. amirheavy666

    May 8, 2017 at 9:05 am

    AND Abour XRP what happen now 0.18 goto 0.25????

    • Jim Fredrickson

      May 8, 2017 at 4:27 pm

      .25 was our target, but i didn’t expect to get there for another month. amazing.

  8. excesstomcat1

    May 8, 2017 at 9:05 am

    Can you please go into more detail about when to potentially sell Ethereum? Also what did you mean by ETH dropped to $30? I did not see that on coinbase.

    • Jim Fredrickson

      May 8, 2017 at 11:01 am

      Apparently, this massacre was limited to Kraken. This is the exchange I trade on and monitor, so I did not realize this aberration occurred on a smaller scale. I am surprised that arbitrage did not arrest this massacre, if it was not happening elsewhere at the same time – but there it is.

      • ryepdx

        May 8, 2017 at 8:27 pm

        Poloniex was also down during the Kraken DDOS, which probably hindered arbitrage. This was pretty clear market manipulation.

  9. thoth

    May 8, 2017 at 9:41 am

    “We suggested that ETH might correct to the $5.50 area. At this writing we have a low of $5.17. It seems like a low might be in, but it is hard to say.”

    You mean ETC?

    • Jim Fredrickson

      May 8, 2017 at 11:02 am

      Yes, thank you for correcting my error.

  10. thoth

    May 8, 2017 at 10:16 am

    And those ETH sells on Kraken looks like fat fingers, nowhere else went near that low in USD

    • Jim Fredrickson

      May 8, 2017 at 11:04 am

      Could have been, but it does not matter if it was fat fingers or thin. The result is the same.

  11. titaniumdave

    May 8, 2017 at 11:49 am

    KRAKEN froze yeserday. Volume dried up during the freeze, dropping price and triggering calls. The drop in price of ETH had nothing to do with actual market sentiment and everything to do with their glitch, which is why it was localized to Kraken and didn’t occur on any other exchanges. ETH sentiment is still strong.

    • Jim Fredrickson

      May 8, 2017 at 3:35 pm

      That’s quite relevant information from a technology point of view. But from a traders point of view, it is irrelevant what caused such a price fluctuation. I write this column from a trader’s point of view, to help traders.

      • Joshnj82

        May 9, 2017 at 9:24 am

        The massacre began around 6:00p EST with a large sell order dropping ETH price on Kraken. Sh-t really hit the fan as the market went down from a DDoS attack and traders were unable to manage their positions causing plenty of liquidations and triggered SL’s. The selloff was seen across all markets but the bottom was significantly lower on Kraken.

        • Jim Fredrickson

          May 9, 2017 at 10:28 pm

          That is interesting, from an intellectual point of view. But I don’t buy DDoS as a “reason”, since the damage was limited pretty much to ETH (that day). It was chart-specific. Anyways, speaking for myself, as a trader, I don’t care all that much about “why” a chart makes a significant move. I mean, does it really matter? Not to me. There are million pieces of news events every day. Some bullish, some bearish. The charts give warnings of danger in advance, most of the time. I will likely address this issue in my next column. Thank you…

          • Joshnj82

            May 9, 2017 at 11:59 pm

            I mentioned the DDos attack in regards to losses and liquidations on Kraken only. I agree with your overall statement and wasn’t trying to speculate with a broad brush. I believe ETH bottomed at $26 on Kraken vs ~mid 70s elsewhere. To your point, the “why’s” are besides the point

  12. octave

    May 8, 2017 at 3:29 pm

    Are you on drugs? Many mistakes in this article

  13. And

    May 8, 2017 at 8:54 pm

    Jim, do not pay any attention to inappropriate comments. Your articles are simply fantastic! Thank you Jim!

  14. [email protected]

    May 8, 2017 at 9:02 pm

    I always follow and appreciate your suggestions. But always check few basics before actions. Mistakes happens but you are quick to rectify and update on twitter.

    Keep up the good work Jim. Thanks again.

  15. jedadoo

    May 8, 2017 at 10:03 pm

    Should rename this to “Monday Afternoon Ripple Massacre” — nearly 40% drop in mere minutes.

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Analysis

Futures Update: Deeper Correction Looms for S&P 500

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The S&P 500 FUTURES (SP) has been in a multi-year uptrend ever since it recorded lows of 665.70 in March 2009 closer to the end of the financial meltdown. If you are one of those who rode this trend early on, you would have substantially grown your capital over time. Even with the recent correction, you likely believe that the market will resume its uptrend very soon just like it did before.

Nevertheless, this is not the time to be complacent. The recent SP bounce is looking like the dead-cat type. This gives us reasons to believe that there might be more pain ahead for investors. In this article, we show how there’s a deeper correction looming for the S&P 500 index and, by extension, its futures.

Bearish Short-Term

S&P 500 futures may have rejected lower prices when it bounced off lows of 2,371 on December 26, 2018. However, there’s very little about this bounce telling us that the market remains bullish. In fact, several technical indicators suggest that this is a relief rally rather than a true recovery.

Daily chart of SP

First, we can see the SP creating a V-shaped pattern. While a market can reverse using this pattern, it rarely happens. When it does, there’s always time given for accumulation at the bottom. This is something that we do not see in the market’s V-shaped structure. Without some form of accumulation to keep the move up sustainable, the market is at risk of giving up all of its gains.

Gold (XAU/USD) as sample of V-shaped reversal

Speaking of a solid base, the rally somehow materialized even with declining volume. This usually happens in an oversold market where sellers take a step back and allow the market to recover so they can short the bounce. We can see this possibility playing out in the S&P 500 futures as the market approaches resistance of 2,619.60.

With weak volume and fading bullish momentum, we expect the S&P 500 futures to resume their slide in the next few days.

Weak Long-term Technical Setups

The technical setups in the longer time frame affirm our assumption that more pain is ahead for this futures market. First and most importantly, there seems to be a divergence between volume and price. In a healthy bullish market, price goes up as volume increases. This makes sense as a growing demand in the form of increasing volume lifts prices.

On the other hand, a rising market with weakening volume is a red flag for most investors. It hints that the market is unhealthy and may be manipulated by an unknown entity. We’re seeing  this divergence in the S&P 500 futures.

Volume divergence on the monthly chart

On top of that, the 100 MA on the weekly chart is acting as a firm resistance. It is crawling closely to our immediate resistance of 2,619.60. In addition, the weekly RSI appears to face heavy resistance at 50. All these indicators suggest that bears are primed to take over the market.

Weekly chart of SP

Projected Move

With all these bearish signals in front of us, bulls must now do everything they can to take back resistance of 2,619.60 in order to dissipate the growing bearish sentiment. Failure to do so would mean that the market has flipped 2,619.60 support into a firm resistance (S/R flip). This would send a strong message that bears are flexing their muscles.

Should this happen, we expect SP to revisit lows of 2,317 where a technical bounce is likely to happen. However, this bounce will likely be weak and would not have the steam to go above 2,469. That S/R flip should be the final nail in SP’s coffin.

Projected SP price action

A break below 2,317 would ignite panic selling in the market. The next support below that level is 1,920. Interestingly, the 100 MA on the monthly chart is also crawling around that price area. This is the target for those who want to short the market once SP takes out support of 2,317.

Bottom Line

The S&P 500 futures may have recently bounced. However, all signs point to an even deeper correction. With bearish short-term and long-term setups, the market may be headed for more pain.

 

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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3.8 stars on average, based on 308 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

Crypto Update: Coins Retreat After Rally Attempt

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While yesterday the major cryptocurrencies recovered their weekend losses and bounced back above their prior lows, the bounce got halted before changing the short-term technical setup. As the world is focused on today’s key Brexit vote, trading volumes are once again very low, but the lack of bullish follow-through is a warning sign for traders here even considering the low level of trading activity.

We haven’t seen signs of a developing leadership in recent days, with correlations remaining high and with the top coins failing at the first major levels of resistance for now. That said, should the coins hold above yesterday’s lows and push above consolidation range, the formation of a bear-trap pattern is still possible even as odds still favor the continuation of the bear market.

In light of the short- and long-term setups, traders and investors should still stay away from entering new positions, with our trend model still being on sell signals on both time frames for the majority of the top coins.

BTC/USD, 4-Hour Chart Analysis

While the breakdown in Bitcoin got bought yesterday, the bounce failed to reach the $3850 level and the most valuable coin is still hovering near the $3600 level, leaving both the neutral short-term, and of course, the long-term sell signal intact in our trend model.

A move above $3850 would be a positive sign for bulls, but odds still favor a negative outcome and a likely test of the $3000 level in the coming weeks, so even short-term traders should still away from entering new positions here. Further, weaker support is found near $3250, with resistance ahead between $4000 and $4050, and near $4450.

ETH/USD, 4-Hour Chart Analysis

Although Ethereum briefly topped the $130 level after plunging below the $120 support, a failed breakdown pattern hasn’t been confirmed in the previously leading coin, and the short-term sell signal remains in place in our trend model.

With the bearish long-term picture in mind, and with the oversold short-term momentum readings now cleared, the outlook for the coin remains negative, even as the resumption the counter-trend rally is still a possibility here. Further support below $120 is found between $95 and $100, while resistance is ahead at $160 and near $180.

Altcoins Still Stuck in Downtrends Across the Board

LTC/USD, 4-Hour Chart Analysis

Litecoin’s rally stooped near the upper boundary of last week’s consolidation range, and although the coin is safely above the key $30-$30.50 support zone, the momentum of the bounce is waning. The bearish long-term forces still seem to be dominant, and the coin is well below the primary resistance level near $34.50, so our trend model remains on sell signals on both time-frames. Further strong resistance ahead near $38 and $44 and with support is found near $26 and $23.

XRP/USDT, 4-Hour Chart Analysis

Ripple experienced a brief period of relative stability after the weekend sell-off, but that didn’t change the bearish overall picture for the coin, and technicals are still hostile for bulls here. The coin continues to hover around the $0.32 price level, but we still expect a move below $0.30 in the coming weeks with a test of the bear market lows being the most likely scenario.

Another strong support level is found near the $0.26 level, with resistance ahead near $0.3550, $0.3750, and in the key long-term zone between $0.42 and $0.46.

XMR/USDT, 4-Hour Chart Analysis

Monero is also among the weaker majors and although it bounced back together with the broader market, it failed to sustainably recapture the $45 level, and it remains in clear short- and long-term downtrend. Our trend model is o sell signals on both time-frames as well, and the re-test of the bear market low just below $38 seems very likely in the coming weeks.

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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4.7 stars on average, based on 441 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

EOS Price Analysis: EOS/USD Back in Unsettled Territory, as Price Runs into Sellers Again

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  • The EOS/USD bulls are unable to sustain any upside momentum following a breach of critical support.
  • Near-term supply is eyed in the early $2.5000 region. A break above would likely open the door for another retest of the big $3.0000.

The EOS price was seen creeping lower again in the early part of trading on Tuesday. This comes after a big jump to the upside seen in the second part of the session on Monday. EOS/USD had gained a chunky double-digits, around 12%, at the close of the daily. Buyers came in after the low print on Sunday 13th at around $2.25. This was within a market demand zone, tracking from $2.25-$2.35, having supported the price on occasions in December and January.

Recap: Big Breach of Critical Support

EOS/USD daily chart.

As a reminder, EOS/USD throughout its most recent bull run, which was seen from 6th December right up to 9th January, was well-supported. An ascending trend line could be observed, providing necessary comfort to the bulls. However, all runs must come to an eventual end, and the bears smashed through this support on 10th January. Given the break through this vital area, it exacerbated the move to the downside. The price had dropped a heavy 22%, taking a big blow after a strong run.

Barriers Blocking Bulls

The bulls have been cut short for now, not being able to have sustained that momentum from the session on Monday. Trading has been extremely choppy since 19th December, via the daily chart view, highlighting a real lack of consistency in either direction. A consecutive streak longer than two days from either bear or bull camp hasn’t happened since the run higher in mid-December. This demonstrates just how mundane and non-committed market participant are for now.

In addition to the last statement above, further technical levels and areas continue to plague direction. To elaborate, there are more areas that the price must deal with now in comparison to the smooth bull run higher seen in 2017. Separately, if looking at 2018, the bears generally had an easy ride south. This is thanks to the cryptocurrency instruments being so young still in age.

Key Near-term Levels

For the bulls to see greater upside, a break of near-term supply within the early $2.5000 region will need to push prices forward. This should open the door to a fast move to see a retest of the breached ascending trend line. In proximity to this is the psychological $3.0000 mark, which has proven to be a huge barrier for the bulls. To the downside, the mentioned demand area of $2.35-$2.25 is critical, and a failure to hold will be very punishing. Lastly, EOS/USD would be subject to a move sub-$2.0000, where support can be eyed. As a further worth case, then $1.5500 to be retested, the December low.

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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4.6 stars on average, based on 106 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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