Ethereum - Distribution Leading Up to The Merge
Updated
For a change, here is a post that isn't macro-focused. This is me simply trying to speculate about what path ETH will take leading up to the merge, as a bit of a follow-up to my last post. These scenarios assume it will be a "sell the news" event, but one involves a push higher, the others do not. As I noted in my last analysis, Ethereum is really hard to day-trade. Crypto is in general, which is why for me to make it profitable I would have to always cut positions early and accumulate wins, rather than wait for something to play out. Market makers ALWAYS run the stop losses. This is how exchanges make money.
After experiencing wins, losses, stop-outs, and liquidations, I feel like I really understand how this works, and THAT'S what makes me even more afraid of doing it with significant capital, as it would be a quick road to financial ruin.
Now, back to the analysis:
Price can of course switch between these arrows. For instance, it can start off on the yellow path but end up on the green. Or, it can start off on the green path and end up with orange. These pathways also assume that the end result is the same, and I am not accounting for the bullish scenario where Ethereum heads to new all time highs. This is assuming distribution. I think distribution is likely here because there is a fair amount of uncertainty leading up to the fork, particularly about what will happen afterwards. I think it can ultimately be a disaster for ETH price.
Orange - Price makes another attempt at the 2k area and gets rejected, causing price to head to a lower consolidation level, in the $1400-1600 range. Then price makes a final push, reaching a lower high by the merge.
Yellow - Price falls here and makes a new lower low before taking the other pathways.
Green - Price goes largely sideways until early September, while staying mostly above $1670-1700. This would be the ideal to trade, and is sort of what I'm going with, using whatever I have set aside for day trading (gambling).
I must emphasize that I am not a particularly good day trader. I have been fairly good at nailing the larger macro moves, but this involves legitimate data analysis and a LOT of patience. Day trading is mostly algo-driven, and I have yet to truly commit to developing a system that's profitable. The only reason I sometimes do it because it's sort of fun, if a bit frustrating. And I'm a masochist. I actually think day-trading crypto has gotten more difficult over the years, unless you're using a bot. The far more profitable thing for me is to invest in a career.
This is meant for speculation and entertainment only, not as financial advice!
-Victor Cobra
After experiencing wins, losses, stop-outs, and liquidations, I feel like I really understand how this works, and THAT'S what makes me even more afraid of doing it with significant capital, as it would be a quick road to financial ruin.
Now, back to the analysis:
Price can of course switch between these arrows. For instance, it can start off on the yellow path but end up on the green. Or, it can start off on the green path and end up with orange. These pathways also assume that the end result is the same, and I am not accounting for the bullish scenario where Ethereum heads to new all time highs. This is assuming distribution. I think distribution is likely here because there is a fair amount of uncertainty leading up to the fork, particularly about what will happen afterwards. I think it can ultimately be a disaster for ETH price.
Orange - Price makes another attempt at the 2k area and gets rejected, causing price to head to a lower consolidation level, in the $1400-1600 range. Then price makes a final push, reaching a lower high by the merge.
Yellow - Price falls here and makes a new lower low before taking the other pathways.
Green - Price goes largely sideways until early September, while staying mostly above $1670-1700. This would be the ideal to trade, and is sort of what I'm going with, using whatever I have set aside for day trading (gambling).
I must emphasize that I am not a particularly good day trader. I have been fairly good at nailing the larger macro moves, but this involves legitimate data analysis and a LOT of patience. Day trading is mostly algo-driven, and I have yet to truly commit to developing a system that's profitable. The only reason I sometimes do it because it's sort of fun, if a bit frustrating. And I'm a masochist. I actually think day-trading crypto has gotten more difficult over the years, unless you're using a bot. The far more profitable thing for me is to invest in a career.
This is meant for speculation and entertainment only, not as financial advice!
-Victor Cobra
Note
Hmm might be aiming for yellow. It’s a tough call. I suppose it can also follow the yellow and keep dumping to new lows but I wonder if market makers would allow it. In any case, decided to re-short.Trade closed: target reached
Closed the short. First target area reached, liquidity below the 1670 level. Now will see if we get any small relief over the weekend, or if it keeps dumping.Trade active
PA has been particularly weak, and it overshot my initial bearish target by a fair amount, but still in the zone marked on my chart for the leg down. Punting a long here from 1558, targeting 1670-1720, but wouldn't be surprised to see it just barely fail before there. Also wouldn't be surprised to see it keep dropping, but usually the market likes to chop up traders first ; ) Note
Trade closed: target reached
Reached a shallow target in the 1670 area. Tough spot to be in position so I’m out for now. If it pushes higher, I may choose to short again.Trade active
Re-longed at 1612, tried to stick another order at 1596 but it didn’t hit. Oh well. Now let’s see if it can go for a short squeeze into a lower high.Note
Potential lower high here, but could push up a little further. Now short from 1700 so let’s see what gives.Note
Barring the whipsaw behavior from this morning, my plan is still active, now adding a possible scenario of a breakdown straight to $900, without much support at $1300-1400. Reason being Bitcoin's own weakness, and it is in danger of making a lower low below $17600 sooner than ETH. Still would strongly consider closing my short on a touch of that $1300-1400 range. Note
Breaking below $1600 would probably mean that the green scenario is off the table, meaning that the high for ETH could be set.Note
Boo yah. Now do we bounce here, or continue lower? Decisions, decisions... Trade closed: target reached
Target reached, but unfortunately didn’t get a second chance at those lows to close. Still decent profit. Now going to punt a long, targeting above $1700, and potentially 2k+.Trade active
Scalped a small long but flipped short again. This is quite tricky PA and honestly being out of position is probably the wiser move. I’m keeping a stop loss this time because we could also see an explosive move to the upside.Trade closed: stop reached
Kept a tight stop and there it goes! Time to take a break. Going to wait on the sidelines for now to see some more structure develop.Trade active
What insane price action. I did Re-enter short with a 1621 average entry (could have waited for 1680 resistance but got impatient). I wonder if that was it for the top. Let’s see!Note
One of the biggest red flags here is ETH moving up while bitcoin lingers just at major support. Not surprising to see Bitcoin dump today.Trade closed manually
Closed for profit. Again, not much follow through on the downside for ETH. Let’s see how crypto reacts to stocks today.Trade active
Re-entered near close price. Still don’t like the relative weakness against stocks for crypto, but we’ll see.Trade closed: stop reached
Well! That’s that. Again, really difficult trading. Think I’m done for now.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.