• Francisco Hernandez

After a 9% gain, Ethereum turns bearish

Introduction


It has been two whole months since my previous article on Ethereum. Since then, price is up about 9%. However, the charts are suggesting a downward trend may be on the way. In this article, I look at the moving averages, Bollinger Bands, Fibonacci retracements, and a handful of indicators. Overall, Ethereum is looking bearish.

Price is up about 9% since May 1st, 2020.


Moving averages


Since May 1st, 2020 there was a few golden crosses (i.e., a lower-level moving average crosses over a higher-level time frame). The 20-day moving average (MA) crossed over the 50-, 200-, and 100-day MA. The 50-day MA crossed over the 200- and 100-day MA. Price reacted accordingly with about a $40 gain in the last few days of May. It seems as if price reacted more to the 50-day MA golden crosses. Price has since dropped and it looks like the 20-day MA is approaching the 50-day MA. I see a potential death cross coming (i.e., lower-level MA crosses under a higher-level time MA).

Moving averages formed golden crosses.


Bollinger Bands


With that pump at the end of May, price broke over the upper BB. This suggests that price increased significantly (i.e., two standard deviations above). Price dropped and broke above the upper band again in the couple days after that. Since that price broke below the middle band (i.e., 20-day MA) and tried to break above it but ultimately fell below it. Currently price remains below the middle band.

Price is in the lower band.


Fibonacci retracements


For this Fibonacci retracement I used $0 as the lower price and the all-time-high (ATH) as the higher price. From the ATH, price is sitting below the 78.6% retracement level. It is now shown below, but price reached this level back in February 2020 and then was crushed after the COVID-19 pandemic. Price has been rising since but will have to face this level again. Also, this retracement level will act as resistance.

Price approaching the 78.6% Fibonacci retracement level.


Heikin-ashi technique


As can be seen by the many green candles at the end of May and into June, the heikin-ashi technique shows that there was a clear up trend. This is evident because the candles have no lower wicks. The first lower wick appeared right after June. This signifies that the trend may be slowing down or coming to an end. As we can see, the uptrend did stop. Currently the heikin-ashi technique suggests price is currently neutral with a bearish bias.

The heikin-ashi technique shows a neural trend.



On Balance Volume


The OBV has been on a downward trend. It has been making lower lows and lower highs. This looks bearish to me. Currently the OBV has yet to make a lower low but given the history across the last two months, it looks likely.

The OBV is looking bearish.


Chaikin Money Flow


The Chaikin Money Flow (CMF) following a similar trend to the OBV. However, the CMF is over the zero line which is good, but the CMF is looking bearish going into July. The CMF has made a lower low--a very bearish sign.

Chaikin Money Flow makes a lower low.


MACD


The MACD is also looking bearish. Very bearish. The MACD line (blue) has crossed below the zero line and the signal line (red) is following right behind it. It does kind of look like the MACD line is starting to level out. The histogram is also showing this because they have been getting smaller and have remained equal in length.

MACD line (red) crossed below the zero line.


Conclusion


Ethereum is overall looking bearish; the moving averages seem to be shaping up to form a death cross, price is in the lower Bollinger Band, resistance is at $295.35, the heikin-ashi technique is neutral with a bearish bias, and all the indicators are bearish (i.e., On Balance Volume, Chaikin Money Flow, and MACD). This is not looking good for Ethereum.

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