Trade Recommendation: Ethereum
Just like many cryptocurrencies, Ethereum (ETH/USD) is having a terrible month. Investor outlook turned bleak on August 14, 2018 when the market plummeted to $249.93. At that point, Ethereum was down over 80% from its all-time high of $1,424.30. Just as Ethereum started to look hopeless, bottom pickers emerged.
Technical analysis show that ETH/USD is at the apex of a large falling wedge on the daily and weekly charts. The drop to $249.93 was seen as a buying opportunity since bulls came in droves. You can see this in the recent volume surge. We haven’t seen this volume since May.
The increase in demand pushed the market above $285 support. This is critical as $285 is the staging ground of the rally that saw the cryptocurrency skyrocket to $1,424.30. This tells us that ETH/USD may be badly beaten but it is not yet broken. With the market above $285 again, bulls can use it to gather momentum and break out of the falling wedge.
The strategy is to buy the breakout at $325 as long as the market volume of 380,000 Ethereum is met. Those who bought the bottom might take profits at $325. ETH/USD needs buyers to absorb the selling pressure.
Once ETH/USD takes out $325, it can climb to our target of $520. Sell immediately.
The process may take less than a month.
Daily Chart of Ethereum/US Dollar on Bitfinex
As of this writing, the ETH/USD pair is trading at $304.22 on Bitfinex.
Summary of Strategy
Buy: Breakout at $325 with volume of 380,000 Ethereum.
Stop: $300 after the breakout.
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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