Ethereum (ETH) is about to make or break the altcoin rally. The above chart for ETH/USD
tells the whole story and leaves little room for interpretation. The price is currently resting atop the 21 Day EMA. Below that is the 38.2% Fibonacci retracement level. Above the price is the 61.8% retracement level. Having become range bound these past few days, Ethereum (ETH) now has a support at the 21 Day EMA and the 38.2% Fibonacci level. However, it also faces a strong resistance at the 61.8% Fibonacci retracement level. Additionally, there is the trend line support that Ethereum (ETH) might test short term if it falls to the 38.2% Fibonacci retracement level.
Wave trend analysis shows that Ethereum (ETH), just like before can begin another downtrend towards the bottom of the descending channel. However, there is one difference this time: the price is currently above the 21 Day EMA. Previously, when Ethereum (ETH) would continue its downtrend by forming lower highs and lower lows, the price would reach a top below the 21 Day EMA. This means that Ethereum (ETH) currently has an actual shot at breaking the chains and setting itself free. However, this is not as easy as it seems. Breaking past the 61.8% Fibonacci retracement level would be something Ethereum (ETH) would do for the first time since the correction. Every time during continuation of the downtrend, we have seen Ethereum (ETH) surrender to the 61.8% Fib resistance.
Ethereum (ETH) now has two choices: either it can break above the 61.8% Fib level and make the altcoin rally or break below the 38.2% Fib level and break the altcoin rally. Whatever it does, it will have to be done in the next few days as space is running out for sideways movement. Technical indicators are not very favorable for a strong bullish comeback but they can support a break past the 61.8% Fibonacci resistance. Ethereum (ETH) has already seen a massive correction and to think that it would enter another bear trend from here onwards would be unreasonable. However, as traders and investors we have to prepare against all possible outcomes.
This chart above for ETH/BTC
on the weekly timeframe makes a very important point which many of us ignore as we narrow down on smaller timeframes. The big picture is very clear to those who want to see it, but for those who want to make investment based on short term FOMO or FUD, that’s their prerogative. There is a clear pattern most of these altcoins have traded in to rally and correct. For most cryptocurrencies, it is an alternating sequence of a rising wedge and a falling wedge which essentially completes a bullish gartley pattern, as it forms a double top. Most of these signs and indicators combine to give us the big picture.
If we look at the above chart, we will see that Ethereum (ETH) has been through the same. It first entered a rising wedge since before January 2018. Then it broke out of the rising wedge as expected and formed a double top. After that, it entered a falling wedge as it entered correction thereby also completing a bullish gartley pattern. In September, it broke out of this falling wedge and closed a weekly candle above it. Now, the current weekly candle we see is red but it does not make sense to be red. The whole week is still ahead of us. Therefore, the most likely scenario is that Ethereum (ETH) will continue to rally from here as it has already begun a new trend against Bitcoin (BTC) and soon as it does, the rest of the altcoin market will follow.