I Will Make An Attempt (ETH/BTC)
Updated
Alright guys. It's time I posted an alt/Bitcoin chart for the first time in a while. The reason I stopped posting these setups is because I was simply waiting for more signs of potential bottoms to emerge. For a while, despite my assumptions that some of these coins would bounce a little earlier, they kept dropping through support levels and activating what I noted as likely stop loss areas. In particular, I've held off on trying to call the bottom for ETHBTC. A while ago, I noted a potential bottoming fractal (chart linked below), but that scenario failed to play out. Instead, Ethereum has ventured to 2-year lows. Some people are probably waiting for more obvious signals to call the bottom, but that strategy failed miserably for many people trying to time the Bitcoin bottom 8 months ago.
I'm also doing something else I haven't done in a while: Using the linear chart. I've actually found success with predicting near-term price action based on the linear charts for many altcoins in the past, so I see no reason why I shouldn't bring it back. I've mostly been using the log scale recently because I care more about long term trends (particularly for Bitcoin and the altcoin market cap).
Here it is. I'm going to try to call the bottom here for the ratio. We have a number of strong signals that we could be seeing a reversal in the near future:
1) Sentiment. Depression is real. Most people think alts are never coming back. Many have continued to capitulate into Bitcoin or get out of the market altogether. This really has been an extended bear market for most cryptocurrencies. As I mentioned recently, the altcoin market looks much more similar to Bitcoin's 2014-15 bottom than Bitcoin itself.
2) Bitcoin dominance is at a very important historical pivot area, with the weekly RSI showing a strong sell signal. It has never been higher. We are currently seeing a potential double-top playing out on the dominance chart as well. In the past, we've seen the largest altcoin ratio pumps after the second failed attempt at a resistance level. Take a look at November 2017 on the above chart (the last time dominance was this high).
3) Despite massively dropping ratios, XRP has held $0.26 (barely) and ETH has held $180. These are very important support levels.
4) Bitcoin continues to move sideways and frustrate many traders. Some may get bored and start to gamble on altcoins. We're already seeing that with things like DUSK. However, if we're using institutional involvement as the reason for Bitcoin's solo journey over the last several months, we can assume that the altcoins with the most liquidity may have the most sustained rises (ETH, XRP, LTC, BCH, etc.). This would likely surprise many people, just as Bitcoin's price action has also surprised many people.
5) Indicators on the ETH/BTC chart have almost never been this low on the weekly timeframe. Volume is nonexistent, showing that the biggest trades have already occurred. This means that whales holding large positions in Ethereum may already have made their largest purchases and haven't cared much about the ratio. Volume this year has also tended to peak near tops rather than bottoms. Volume has peaked on Bitcoin dominance, indicating drying up confidence in the trend.
6) ETHBTC already broke its 2-year linear downtrend (orange) earlier this year and tested it as support. The ratio has ventured lower since then, but the stronger downtrend has been cleared. We also have a potential long term uptrend that could be formed on a bounce from current levels. This would be very bullish for the whole crypto market, as it would still be a macro higher low on the ratio for ETH. Same with XRP and XLM. Bitcoin maximalists do not want this to happen. It should be noted that this uptrend has NOT been confirmed yet.
7) I think we could be in "Phase 4" of the crypto market cycle. This is explained in a bunch of my recent video analyses. In phase 4, Bitcoin goes sideways for several months while alts gain some market share. In Phase 4 of the previous cycle, altcoins gained 200-300%. Alts didn't truly gain traction until Bitcoin broke its previous ATH in Phases 5-6.
Bitcoin cycle phases (speculative, but respected perfectly so far since I first drew it out):
Altcoin phases showing that we could even see some more sideways:
We also have some interesting price action on the Binance hourly chart, indicating some coordinated purchases.
If ETH does finally make a comeback here, we could first get stopped by the descending triangle resistance from earlier this year. Once that clears, ETH can make a larger jump up towards the next major trendline (orange broken previous support). Both these targets are shown with green X's. As with previous altcoin ratio bottoms, shakeouts are possible as well. Even if a stop loss is set, price may wick fairly low on illiquid exchanges in "flash crash" events.
The setup is as follows:
BUY 0.017800 - 0.018200
STOP LOSS: below 0.017000, as it can then head down to the 0.014000 zone next.
SELL 0.026990
0.049000
This is not financial advice. I'm just making an attempt here to be a contrarian in the face of a very strong negative trend. It's very possible that I will be wrong. I'm just curious to see if the things I'm looking at here are the right things to pay attention to. Depending on whether I'm right or wrong, I will use the resulting data to improve my future analysis.
-Victor Cobra
I'm also doing something else I haven't done in a while: Using the linear chart. I've actually found success with predicting near-term price action based on the linear charts for many altcoins in the past, so I see no reason why I shouldn't bring it back. I've mostly been using the log scale recently because I care more about long term trends (particularly for Bitcoin and the altcoin market cap).
Here it is. I'm going to try to call the bottom here for the ratio. We have a number of strong signals that we could be seeing a reversal in the near future:
1) Sentiment. Depression is real. Most people think alts are never coming back. Many have continued to capitulate into Bitcoin or get out of the market altogether. This really has been an extended bear market for most cryptocurrencies. As I mentioned recently, the altcoin market looks much more similar to Bitcoin's 2014-15 bottom than Bitcoin itself.
2) Bitcoin dominance is at a very important historical pivot area, with the weekly RSI showing a strong sell signal. It has never been higher. We are currently seeing a potential double-top playing out on the dominance chart as well. In the past, we've seen the largest altcoin ratio pumps after the second failed attempt at a resistance level. Take a look at November 2017 on the above chart (the last time dominance was this high).
3) Despite massively dropping ratios, XRP has held $0.26 (barely) and ETH has held $180. These are very important support levels.
4) Bitcoin continues to move sideways and frustrate many traders. Some may get bored and start to gamble on altcoins. We're already seeing that with things like DUSK. However, if we're using institutional involvement as the reason for Bitcoin's solo journey over the last several months, we can assume that the altcoins with the most liquidity may have the most sustained rises (ETH, XRP, LTC, BCH, etc.). This would likely surprise many people, just as Bitcoin's price action has also surprised many people.
5) Indicators on the ETH/BTC chart have almost never been this low on the weekly timeframe. Volume is nonexistent, showing that the biggest trades have already occurred. This means that whales holding large positions in Ethereum may already have made their largest purchases and haven't cared much about the ratio. Volume this year has also tended to peak near tops rather than bottoms. Volume has peaked on Bitcoin dominance, indicating drying up confidence in the trend.
6) ETHBTC already broke its 2-year linear downtrend (orange) earlier this year and tested it as support. The ratio has ventured lower since then, but the stronger downtrend has been cleared. We also have a potential long term uptrend that could be formed on a bounce from current levels. This would be very bullish for the whole crypto market, as it would still be a macro higher low on the ratio for ETH. Same with XRP and XLM. Bitcoin maximalists do not want this to happen. It should be noted that this uptrend has NOT been confirmed yet.
7) I think we could be in "Phase 4" of the crypto market cycle. This is explained in a bunch of my recent video analyses. In phase 4, Bitcoin goes sideways for several months while alts gain some market share. In Phase 4 of the previous cycle, altcoins gained 200-300%. Alts didn't truly gain traction until Bitcoin broke its previous ATH in Phases 5-6.
Bitcoin cycle phases (speculative, but respected perfectly so far since I first drew it out):
Altcoin phases showing that we could even see some more sideways:
We also have some interesting price action on the Binance hourly chart, indicating some coordinated purchases.
If ETH does finally make a comeback here, we could first get stopped by the descending triangle resistance from earlier this year. Once that clears, ETH can make a larger jump up towards the next major trendline (orange broken previous support). Both these targets are shown with green X's. As with previous altcoin ratio bottoms, shakeouts are possible as well. Even if a stop loss is set, price may wick fairly low on illiquid exchanges in "flash crash" events.
The setup is as follows:
BUY 0.017800 - 0.018200
STOP LOSS: below 0.017000, as it can then head down to the 0.014000 zone next.
SELL 0.026990
0.049000
This is not financial advice. I'm just making an attempt here to be a contrarian in the face of a very strong negative trend. It's very possible that I will be wrong. I'm just curious to see if the things I'm looking at here are the right things to pay attention to. Depending on whether I'm right or wrong, I will use the resulting data to improve my future analysis.
-Victor Cobra
Note
Nice little move up already from the buy zone. However, ETH really needs to clear the 0.019990 area if it's going to confirm that we've seen the bottom for the ratio. Note
Dominance bearish divergence and dropping a bit. Note
There may be another opportunity in the buy zone. Here are the important pivot areas on the 4H chart, marked by horizontal lines. If ETH can generally hold above 17500 (excluding wicks) I think we should be good for a bigger bounce. However, USD value is still lagging, and the market-wide volume is extremely low. There is little to no trading interest. If the market can continue at current levels on low volume, it may indicate that the natural demand is starting to outpace supply. This may need to go on for some time before traders start entering positions. For now, volume is too low. Note
ETH has broken below the 0.017 area with no sign of a bounce. We need ETH to get back above and then break the downtrend it's held since June. It's not too far away. We have a strong bullish divergence, but divergences haven't really meant much recently. Note
Some support is still being found here. Bitcoin dominance is right in the middle of a major resistance area, so I don't expect the low 70% area to go down super easily. I'd really like to see ETH and the other alts break out of this wedge to the upside. Note
ETH has now broken the downtrend against Bitcoin and the USD. It'll be interesting to see what happens here. If people had set their stop loss below 17000, they might be waiting for a time to jump back in. ETH is flirting with the major previous support at 17800, so we'll have to see if that breaks. This market can be very tricky. Sometimes people do get shaken out before it goes up. Note
We also have an RSI breakout. This shouldn't ignored.Note
Looks like the dump below 17000 might have actually been a terminal shakeout move. And perhaps my original analysis was correct.Note
Wow, so it seems my original analysis was fairly accurate. The next targets for ETH could be either of those downtrends (orange or light blue). Daily RSI is already overbought, but that doesn't always mean much during major reversals. Eventually it'll need to cool off. I'd be more concerned about the weekly. Note
First, this current zone may provide some strong resistance, since it fell pretty heavily from here on the last move down. You can see that pretty clearly in the above picture. Weekly oscillators have plenty of room for upside, but daily may have to cool off.
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