Trade Recommendation: Ethereum
To say that Ethereum (ETH/BTC) has been a laggard would be an understatement. Its large cap peers such as Litecoin (LTC/BTC), EOS (EOS/BTC), and even Cardano (ADA/BTC) have broken out of accumulation and retested breakout levels. On the other hand, Ethereum is still trapped in range accumulation.
The good news is that the market is starting to show signs of life. If the momentum built over the last 24 hours is sustained, we can expect the market to skyrocket in the next few weeks.
Technical analysis shows that ETH/BTC is about to break out from a descending channel on the daily chart. We have several reasons to support this bias.
First, the market breached critical support of 0.0295 on May 2, 2019. When a legitimate breakdown occurs, the usual reaction is a big red candle down supported by heavy volume. Those are great signals that indicate the market’s bearish.
However, Ethereum managed to hang close to 0.0295 and then reclaimed the support today, May 7th. This tells us that the move below 0.0295 was a false break and false breaks often provide the fuel for a massive rally.
Second, Ethereum has finally broken the diagonal resistance on the daily RSI. The former resistance has kept the market bearish since February 2019. The breakout tells us that momentum has swung to the side of the bulls.
The strategy is to buy the breakout and retest of 0.031 as support. If bulls flip 0.031 resistance into support, they will attract more momentum, which will likely drive the price to our targets of 0.0417 and 0.054.
The process may take a month.
Daily Chart of Ethereum/Bitcoin on Binance
As of this writing, the Ethereum/Bitcoin pair is trading at 0.02985 on Binance.
Summary of Strategy
Buy: Breakout and retest of 0.031 as support.
Targets: 0.0417 and 0.054.
Stop: 0.0295 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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