Trade Recommendation: Ethereum
The Ethereum/US Dollar pair (ETH/USD) started to look bearish on June 8, 2018 when it broke support of $600. The break below the support ignited a waterfall event as it triggered numerous stop losses. Those who bought between $600 – $820 had no choice but to cut their losses.
From that point, the pair had been generating lower highs and lower lows. While the outlook for ETH/USD is not good at the moment, it appears that the bottom is in sight.
Technical analysis show that Ethereum/US Dollar is bound to have a strong rally after one last push down. We have this view because it appears that the pair is creating a third bearish pennant. If you’ve been following our posts, then you know that exhaustion sets in after the third push down.
In support of this view is the large falling wedge on the daily chart earlier this year. ETH/USD bounced after generating two bearish pennants and one bearish flag inside the falling wedge. The rally in April enabled the pair to break out of the falling wedge pattern, which inspired a move up to $820 resistance.
We believe that this process is repeating itself. ETH/USD is currently inside a falling wedge while creating three bearish continuation patterns. When exhaustion sets in again, the pair will likely break out of the falling wedge and climb to our target.
The strategy is to buy as close to $360 support as possible as this appears to be target of the third bearish pennant. If bulls preserve the support, they may ignite a rally to our target of $600.
The process may take a month.
Daily Chart of Ethereum/US Dollar on Bitfinex
As of this writing, the Ethereum/US Dollar pair is trading at 468.62 on Bitfinex.
Summary of Strategy
Buy: Buy as close to $360 as possible.
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.
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