[ETH-USD] is this the end of the long-term downtrend?
If you browse my posting history it is clear that I have been bearish on ETH since I've began publishing ideas on Trading View. I have been bearish for even longer than I've been published here.
Overall I see a lot of fundamental issues with ETH, the project and the idea of a decentralized blockchain actually seeing widespread adoption. From my research and experience in the industry I have found that the underlying technology has great potential, but this does not mean that potential should increase valuations of any tokens. Unless the token has a specific mechanism for returning value to the holders, it will not do so outside of speculation, as all of the benefits (revenue, etc) from their technology and adoption will be retained by the company that issued the token. For this reason I am bearish on not just ETH but many of the alt coins and tokens out there.
At this point in time I don't see any means of ETH returning value to the holders. From my view I see that ETH only has value and potential for price increases as long as speculation exists, the moment speculation ceases then I see absolutely no reason for ETH to hold these price levels. There are a lot of issues with the token model (if not done correctly) and I think these issues will plague ETH over the long-term unless major adjustments take place.
But I digress, looking at ETH from a technical perspective only (ignoring my bearish opinions on fundamentals) I see the potential for a rebound. How long-lasting this rebound may be is up for serious debate imo.
The 1 Week Charts seem to have several indicators of a potential for the price to recover, at least for a certain period of time. A descending triangle formed off of the low point before the peak (Sept. 2017) and the peak price range (Jan. 2018) reaches full convergence around this point in time. As you can see this pattern holds for the entire period, covering Sept. 2017 up until this point Oct. 2018. ETH has consistently traded within this pattern. Given the recent support and sideways movement of ETH, it is very possible that we could be seeing the end of this downtrend or at least a rebound before a continuation. As you can see, we are at a point where the next direction will confirm the continuation of the descending triangle or deny that continuation.
There are two other indicators that lend strength to this analysis. That is the RSI and MACD charts. Points A and B on the MACD charts were great signals, as you can see the cross up at Point A preceded the massive appreciation in price (arguably the start of the bubble) and the downwards cross at Point B confirmed the deflation of the bubble and the beginning of a long downtrend.
Now we are at Point C on the MACD. We could be on the verge of another upwards cross which could signal some potential upside for ETH over the next couple of weeks. Whether or not that upwards trend will hold and continue is another question entirely.
I believe the RSI indicator provides another point to consider when looking at how the trend has progressed. As you can see at Points 1 and 3 on the RSI chart, upward crosses have preceded solid price increases, and downwards crosses preceded price declines, see Points 2 and 4. Now you can see we are at Point 5, approaching an upwards cross on the RSI. This could also be another signal of a potential rebound.
The Fib retracement also provides some solid points to look out for in terms of prices. When the 78.6% mark was crossed on the way down we descended all the way to the $198 point where I charted the beginning of the retracement indicator.
If we are about to enter a price rebound I would expect it to go as far as the high $450 territory before meeting really strong resistance and potentially falling right back down from there. A breakout above the $460 range would indicate a really strong rebound that could continue even further.
In my published ideas you will see that I have charted several shorter term descending triangles on ETH, using very similar metrics MACD, etc. These two published ideas are examples of this, where downwards breakouts in the descending triangles were continuations of the downtrend and these breakouts yielded very profitable trades on the short side.
However, even though those trades netted solid returns on short side positions, for all the reasons above and these technicals I am seeing a potential reversal for at least the mid-term.
We shall see.
All commentary and thoughts are more than welcome.
Happy trading mates!
Overall I see a lot of fundamental issues with ETH, the project and the idea of a decentralized blockchain actually seeing widespread adoption. From my research and experience in the industry I have found that the underlying technology has great potential, but this does not mean that potential should increase valuations of any tokens. Unless the token has a specific mechanism for returning value to the holders, it will not do so outside of speculation, as all of the benefits (revenue, etc) from their technology and adoption will be retained by the company that issued the token. For this reason I am bearish on not just ETH but many of the alt coins and tokens out there.
At this point in time I don't see any means of ETH returning value to the holders. From my view I see that ETH only has value and potential for price increases as long as speculation exists, the moment speculation ceases then I see absolutely no reason for ETH to hold these price levels. There are a lot of issues with the token model (if not done correctly) and I think these issues will plague ETH over the long-term unless major adjustments take place.
But I digress, looking at ETH from a technical perspective only (ignoring my bearish opinions on fundamentals) I see the potential for a rebound. How long-lasting this rebound may be is up for serious debate imo.
The 1 Week Charts seem to have several indicators of a potential for the price to recover, at least for a certain period of time. A descending triangle formed off of the low point before the peak (Sept. 2017) and the peak price range (Jan. 2018) reaches full convergence around this point in time. As you can see this pattern holds for the entire period, covering Sept. 2017 up until this point Oct. 2018. ETH has consistently traded within this pattern. Given the recent support and sideways movement of ETH, it is very possible that we could be seeing the end of this downtrend or at least a rebound before a continuation. As you can see, we are at a point where the next direction will confirm the continuation of the descending triangle or deny that continuation.
There are two other indicators that lend strength to this analysis. That is the RSI and MACD charts. Points A and B on the MACD charts were great signals, as you can see the cross up at Point A preceded the massive appreciation in price (arguably the start of the bubble) and the downwards cross at Point B confirmed the deflation of the bubble and the beginning of a long downtrend.
Now we are at Point C on the MACD. We could be on the verge of another upwards cross which could signal some potential upside for ETH over the next couple of weeks. Whether or not that upwards trend will hold and continue is another question entirely.
I believe the RSI indicator provides another point to consider when looking at how the trend has progressed. As you can see at Points 1 and 3 on the RSI chart, upward crosses have preceded solid price increases, and downwards crosses preceded price declines, see Points 2 and 4. Now you can see we are at Point 5, approaching an upwards cross on the RSI. This could also be another signal of a potential rebound.
The Fib retracement also provides some solid points to look out for in terms of prices. When the 78.6% mark was crossed on the way down we descended all the way to the $198 point where I charted the beginning of the retracement indicator.
If we are about to enter a price rebound I would expect it to go as far as the high $450 territory before meeting really strong resistance and potentially falling right back down from there. A breakout above the $460 range would indicate a really strong rebound that could continue even further.
In my published ideas you will see that I have charted several shorter term descending triangles on ETH, using very similar metrics MACD, etc. These two published ideas are examples of this, where downwards breakouts in the descending triangles were continuations of the downtrend and these breakouts yielded very profitable trades on the short side.
However, even though those trades netted solid returns on short side positions, for all the reasons above and these technicals I am seeing a potential reversal for at least the mid-term.
We shall see.
All commentary and thoughts are more than welcome.
Happy trading mates!
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.