• Francisco Hernandez

Ethereum (ETH) tumbles amid COVID-19 pandemic but makes 50% increase from new yearly low

ETH-USD, 1D, BTSE


Introduction

Having formed the M-top back in February, Ethereum (ETH) has dropped about 47% to a price of $134.44. While the M-top could have formed better (no bounce), price eventually broke down to the target area. Ethereum then retested the breakdown area and failed. Then, on March 11th, the World Health Organization (WHO) declared the novel Coronavirus (COVID-19) as a pandemic. The following day, Ethereum (along with Bitcoin and other cryptocurrencies) took a big fall (~46%); the largest loss of the year so far. Ethereum is now up about 50% from the new yearly low of $90.15. I have speculated this steady rise in price might be attributed to the crypto community's reaction to the United States government's announcement that they will "stimulate" the economy by flooding money into the system. In today's article, I want to steer away from speculation and focus on the technical analysis.

Ethereum's (ETH) loss.


Moving Averages

On March 8th, the 100-day moving average (MA; yellow) crossed the 200-day MA (green) and has been hovering above it since. This was technically a golden cross (green circle), where a short -term MA crosses over a long-term MA. However, the 20-day MA (red) has crossed below the 50- (orange), 100-, and 200-day MA; forming a series of death crosses (red circles). Given the death crosses, I would expect price to drop further. Additionally, price is reaching the 20-day MA which may act as resistance. In terms of MA's, Ethereum has no supports in place at the moment.

Moving averages and crosses.


Bollinger Bands

The Bollinger Bands (BB) are comprised of a 20-day MA (red; middle band) with upper and lower bands (white) at two standard deviations above the 20-day MA. When price touches the upper or lower band, it suggests that price has made a significant increase or decrease. Ethereum (ETH), in this case, has been riding the lower band down since the breakdown from the M-top and has been unable to break past the middle band. In the past week, Ethereum has been leveling out as price once again approaches the middle band. Again, as stated above, I expect this area to act as resistance.

Bollinger Bands.


Fibonacci Retracements

Ethereum (ETH) had made a full 100% retracement to it's previous yearly low of $116.62. Price even made a new yearly low of $90.15. Currently, Ethereum is between the 78.6% and 100% Fibonacci retracement level. The 78.6% level at $153.51 is acting as resistance. See March 20th how the price approached the $153.51 area but was rejected. The $116.62 area is now acting as support. Ethereum could bounce between this price range for the next few days until it either established new support at the 78.6% Fibonacci level or breaks down further past the 100% Fibonacci level.

Fibonacci retracement levels.


On Balance Volume

On Balance Volume (OBV) is looking bearish. The OBV has been making lower highs and lower lows since the M-top formation. Additionally, it is currently pointing downward. Since OBV is a momentum indicator, it's current status suggests momentum is likely going downwards. It also suggests that the markets sentiment is currently bearish.

On Balance Volume.


Chaikin Money Flow

The Chaikin Money Flow (CMF), a measure of buying or selling pressure, is also looking bearish. The CMF has been falling since the M-top, indicating waning buying pressure. The CMF has even broken down past the zero line, which suggests strong selling pressure. Lastly, it is also pointing downwards and is making a lower low.

Chaikin Money Flow.


MACD

The MACD is the only one of the three indicators I used that is giving a bullish signal. While the MACD is still below the zero line, the MACD line (red) has crossed above the signal line (red). The histogram is also rising above the zero line. Given that all the other indicators are signaling as bearish, this bullish signal given off by the MACD cross may be short lived.

MACD.


Conclusion

Ethereum (ETH) is looking neutral to bearish right now. After making nearly a 50% bounce from the new yearly bottom of $90.15, steam may be running out. Two of three indicators are bearish (OBV and CMF), with one suggesting a bullish signal (MACD). However, price currently has no support in terms of moving averages (MA) and faces two forms of resistance (the 20-day MA and the 78.6% Fibonacci retracement level). Price may range between the 78.6% and 100% Fibonacci levels of $153.51 and $116.62 for the next few days. To be convinced of a bullish move, I would like to see the CMF and OBV flip directions and making higher highs. I would also like to see Ethereum form support at the 20-day MA of about $147 and continue further up to the 78.6% Fibonacci level of $153.51 as new support.

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