Although it seems risky to propose, it’s possible that Ethereum (ETH) has finally hit bottom and is reversing after a blistering summer season of correction and capitulation. And indeed, this analyst could end up eating his words before long.
We start with the weekly close on ETH/BTC, as the leading altcoin is putting in solid performance that looks like classic reversal. We see a doji/hanging man candle on the week before last, followed by a bullish engulfing candle (engulfing two weeks before) which pretty much confirmed strength for a reversal.
The indicators agree, with the histogram now clearly arcing up at an increasing rate, and RSI recovering from one of its most oversold levels ever in the history of Ethereum. Volume (Bitstamp) is building too, although we would like to see a more impressive bump at the end of the coming week.
If we move to the daily ETH/BTC chart, we see that Ethereum is clearly breaking some important resistance levels. The 21 exponential moving average (EMA) has been solidly taken out. We can expect resistance at the 55 EMA, and perhaps a range within these levels as the lower EMAs catch up to price.
With 14 hours left in the trading day at time of writing, we are almost sure to see a higher volume on today’s candle. It is probably worth mentioning that this bottom formation strongly resembles a classic reverse head-and-shoulders pattern on lower timeframes like the 4-hour; and indeed, is playing out perfectly.
Moving swiftly to the ETH/USD pairing, we see a similar picture on the 4-hour and little sign that this rally will end. We see an overbought RSI, but no bearish divergences and this just means a cooling-off period could obtain for the next couple of days while Ethereum consolidates around $190.
The histogram does have a slight bearish divergence, but also looks like it may not be finished on the positive side of the chart.
Time will tell if this reversal is the reversal, or just more noise on the way down. Ethereum has in past months capitulated to 2017 prices versus BTC, so it will probably take a lot to effect a reversal. But unless the leading altcoin goes to zero, it has to come eventually.
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