Trade Recommendation: Ethereum

The Ethereum/US Dollar pair (ETH/USD) launched its bull run on November 23, 2017 when it broke out of $400 resistance. With a solid base between $200 – $400, the market skyrocketed to as high as $1,419.96 on January 13, 2018. In less than two months, the pair grew by almost 255%. Those who bought the breakout and followed the trend were happy to take profits.   

Faced with heavy selling pressure, the market dropped to $757 on January 17. Bottom pickers bought the dip but the rally they inspired could only carry the market to $1,224 on January 28. The lower high was a clear signal that the bull run was over. Market participants responded by taking profits or cutting their losses. As a result, the market created a series of lower highs and lower lows until recent price action.  

Technical analysis show that Ethereum/US Dollar appears to be bottoming out at $400 support. This comes after the pair may have capitulated on March 18 when it printed over 375% of its average daily volume. In addition, volume also spiked on March 29 and March 30 when the pair went below $400 support. This suggests that bulls are coming out to buy the support.

The strategy is to buy as close to $400 as possible. If bulls defend the support, they will create a base before moving to our target of $620. Sell immediately once target is hit because the pair will most likely range trade to repair its technical damage. The process may take a month.

Daily Chart of ETH/USD on Coinbase

As of this writing, the Ethereum/US Dollar pair is trading at $421.44 on Coinbase.

Summary of Strategy

Buy: As close to $400 as possible.

Target: $620

Stop: $360

 

Disclaimer: The writer 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.

Kiril 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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.