Ethereum (ETH) has finally completed a gap down. Most retail investors often seem to not care much about such minute details but investors who are risking millions of dollars have to be careful. If we look carefully at the ETH/USD weekly chart we can see that the last green candle that attempted to retest the support left a small gap after it recovered. The average investor took this as a sign of recovery and thus was quick to enter buy positions or worse, leveraged buy positions. However, the whales or big investors had their eyes on this gap. So, when the price touched the 5 Week EMA and got rejected, they took it as a strong sign of weakness and became more convinced that the gap down is going to be filled in the near future.
The above weekly chart for ETH/USD shows more clearly how the previous retest of the support left a gap that has now been filled. The price has successfully defended the support and resisted a fall below it. However, the gap is now complete and the price can surge higher in the weeks ahead. To most retail investors, this might be a trivial concern, but it is important to be absolutely clear whether you are trading or investing. If you are trading, then it is very important to be wary of such developments. However, if you are investing, then you can afford to miss them because the long term outlook is clear. The price has now completed a bullish gartley pattern and is all set for a climb sooner rather than later. That being said, the price could fall further short term which is what we have seen today.
The weekly chart for ETH/BTC shows the price to have reached oversold conditions now. The price is unlikely to drop any lower. Most investors and analysts called the previous dip as the last wave of capitulation. It could have actually been the last wave of capitulation but it appears that the whales deliberately left a gap down to be filled later. One reason for that could be an attempt to liquidate overly enthusiastic longs on exchanges like Bitmex or Bitfinex after bulls considered the supposed final wave of capitulation to be the ultimate end of the correction. This goes on to show how dangerous trading with leverage can be especially in times of low volume and volatility. The price may trade sideways for a while and before you know it, you may see a swing here or there without their being a logical explanation to support it.
The cryptocurrency markets are very prone to manipulation at this stage considering there is no formal regulation and for all we know exchanges that allow traders to buy or sell on margin could be working with whales to make their job easier for them. In any case, it is important not to outsmart the market short term. The price eventually ends up doing what it is supposed to do long term but certain events often end up influencing the sentiments of amateur traders. So, the price does eventually end up recovering from its lows but most often without the investors that give in to emotions.