Trade Recommendation: Ethereum
The Ethereum (ETH/USD) market has gone down so much that catching the bottom has been tricky. That’s why we were okay that we got left behind when ETH rallied to as high as $167 on January 5, 2019 from the low of $83 on December 7, 2018. Markets always pull back and they always offer the opportunity to buy on dips.
With this in mind, we waited for Ethereum to significantly retrace before considering to long the market. Our patience appears to be paying off as we’re getting our buy signals today.
Technical analysis shows that ETH/USD has taken out the diagonal resistance of $109. This triggered the breakout from a descending channel on the 4-hour chart. The price action tells us that Ethereum might be ripe for a strong rally.
What’s interesting about this breakout is that it started after Ethereum revisited support of $104 on January 28, 2019. The market immediately rejected lower prices and managed to stay above the support for a couple of days. Many interpreted this as a possible higher low setup. As a result, the market was able to rally to as high as $114.33 on February 2.
While the breakout rally faded, Ethereum appears to have flipped the diagonal resistance into support. This was the last piece of evidence that convinced us that the market has turned bullish.
The strategy is to buy as close to $109 as possible. As long as ETH/USD trades above this level, it will likely rally to our initial target of $134. Take that out and the next target is $162.
The process may take less than a month.
4-Hour Chart of Ethereum/US Dollar on Bitfinex
As of this writing, the Ethereum/US Dollar pair is trading at $109.10 on Bitfinex.
Summary of Strategy
Buy: As close to $109 as possible.
Targets: $134 and 162.
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.