PRIOR ANALYSIS SUMMARIZED
On June 24, the main post reviewed the consolidative nature of ETH’s price action since the June 2022 low. The analysis stated that ETH’s trend was largely sideways with a modest incline—and that this sideways to slightly upward price action appeared *consolidative* of the preceding 2022 decline. Despite a +130% move off the June 2022 lows, and another 99% move higher from the November 2022 lows, the chop and major retracements revealed that the price action was likely consolidative of the sharp and trending bear-market decline that came in 1H 2022. This is visible when looking at a higher-time frame chart such as the weekly primary chart that may be refreshed at the top of this post.
At the larger / higher degree of trend, SquishTrade discussed major VWAPs from the June 2022 low and ETH’s all-time high—those VWAPs were largely sideways with price contained between them. This confirmed the consolidative nature of the price action since the 2022 lows occurred. A few triangle patterns were also shown on log and linear charts (triangle patterns also represented this larger degree consolidation).
And an unconfirmed bear-flag channel—a > 1-year uptrend line that together with its return line creates a parallel channel, was noted. This modest uptrend from the June 2022 low presented the potential for prices to remain supported. In this context of consolidation, the post noted that “supported” meant that price action would remain consolidative / sideways and not crashing unless the uptrend broke.
Nested within the 1-year bear flag at the larger degree of trend was a shorter-term bull-flag (a downward-sloping channel). This was tracked in the updates for a few weeks as price appeared to be breaking above it. But the breakout appeared quite weak and never rose past $2027. SquishTrade questioned the viability of this breakout on July 17. Squish described the problem with price action as follows (quotation in italics):
"Today, here and now, several reasons have arisen to question the viability of breakout from the smaller bull-flag channel.
1. The apparent breakout from the short-term bull flag seems to be unfolding in fits and starts—sporadic and intermittent bursts higher followed by deep retraces. This sporadic and choppy action, combined with the continuing decline in volume on the weekly chart, suggests that the larger bear-flag channel controls the smaller bull-flag channel. So the longer-term bear flag perhaps dominates the overall price action despite the existence of an apparent bull-flag channel breakout. In other words, the unreliable and choppy price action post-breakout could be explained by the bull-flag channel’s position as nested within a larger bear-flag channel, and the larger bear-flag channel (see primary chart above) is consolidative / corrective despite moving higher: consolidative price action is more choppy, less trendlike, and more unpredictable than trendlike action.
2. Significant failure and reaction lower at the all-time-high anchored VWAP (red), which SquishTrade had mentioned as the initial logical target for a breakout.
3. ETH seems to be taking a bit too long to make a typical trend-like move higher following the apparent smaller bull-flag breakout. Yet ETH has held the anchored VWAP from the June 15, 2023, low.
. . . .
5. At what point should one conclude price has fallen back within the scope of the downward-sloping bull-flag channel?
—Price falls below the June 15, 2023, anchored VWAP
—Price falls and holds below the downtrend line from mid-April 2023 that forms the upper bound of the bull-flag channel
On July 24, one week later, price decisively fell below the June 15 low VWAP. After a retest or two, price continued to show weakness below this June 15 anchored VWAP.
In short, price failed in its breakout of the bull-flag channel. In this regard, SquishTrade has so far been incorrect in the analysis that the breakout of the smaller (nested) channel would lead to the top of the bear-flag channel. But the bear-flag channel with a modest uptrend from June 2022 lows remains valid and intact. It also provides a good level to watch when and if it breaks to the upside or downside. In any case, for now, price remains controlled by and contained within the larger-degree consolidation represented by the unconfirmed bear-flag channel.