Technical Analysis and Market Entry: ETH/USD Returning to $100 Cannot Be Ruled Out

  • Ethereum is firmly within the control of the market bears bear market, trading around the seven-month lows.
  • A return down to the psychological $100 mark cannot be ruled out, given the current downside pressure. 

ETH/USD: Recent Price Behaviour

ETH/USD is very much tilted to the downside, with the price trading just off seven-month lows. The entire market has been firmly within the firm control of the market bears since the back end of June.  There is a lack of indication that this current trend is going to change anytime soon. 

The ETH price has fallen from a high of the year up at $363, dropping some 63% since. Selling pressure had come into play after the bulls had failed to breakdown a chunky area of supply. The barrier runs from $360-$360, which if tackled, could have provided a fast return to $500.

Price action in the first half of 2019 was being supported by an ascending trend line, which commenced in December 2018. The bulls were comforted if needed in their ascent to the north. However, given the intensity of the earlier mentioned downfall in June, the price consequently breached the support. 

ETH/USD not long after falling below the trend line which was in August, retested in September, being dealt a rejection below. It completed the technical move, with the breakout and retest, leaving it vulnerable to further downside pressures. 

ETH/USD daily chart.

Bearish Pennant Structures

Price action began to consolidate following the noted breakout and retest. ETH/USD had formed a bearish pennant structure, between 25 September to 15 November. Market bears managed to capitalize on this, forcing a breakout and another strong bout of selling pressure. 

The price has again formed another pennant structure, subject to a potential breakout south. It commenced formation from 22 November to 1 December. A breach has been observed, which does point to further vulnerabilities for Ethereum. 

For now, ETH/USD is just flirting underneath the pattern, awaiting the next committed move. If the price continues to be held by the lower acting trend line of the pennant, then the move south should likely resume.

Trade Recommendation

Given the above-detailed pennant breakout, short opportunities remain attractive. Entries are eyed around the current market price, in terms of targets; $120, $100 and then $80. Stops to be placed just above the structure at $160.

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.

Author:
Ken 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.