Ethereum (ETH) Remains Above The 61.8% Fib Level Despite Hard Fork Delay

Ethereum (ETH) is likely to trade higher in the days ahead as the price has remained above the 61.8% Fib extension level despite the hard fork postponement. Investors seem to have overreacted to ETH/USD following the recent announcement but now that the dust has settled, the momentum is starting to shift back in favor of the bulls. It is important to note that at this point, the majority of investors in the market are people with nerves of steel. You are not going to see them fleeing the battlefield on announcements like these. In fact, the most likely scenario is that they are going to take them as opportunities to accumulate more. However, they are not going to do that without waiting for the weak hands to overreact to it first.

Market movements are more a game of psychology than chart analysis. At every point, you have to look at the intent. If you can see the intent, you need not know a thing about technical analysis and you will succeed most of the time. This is why this prolonged bear market has been such a useful lesson for most investors that helped themselves to accept this experience in a meaningful way and to their advantage. The market does not react the same way to news and announcements at every cycle. Why? The reason we have different responses at different parts of a market cycle is because every part of a cycle comprises of different proportions of smart and dumb money.

Where the smart money is high relative to the dumb money, we see the market react mildly to announcements. Even if this had been a positive announcement, the reaction would have been short lived as well and it would be a non-event in the grand scheme of things. The reason is simple: smart money does not trade on sentiment. However, if we were near the top or bottom of the cycle, such news would have had a very different reaction. In fact, we have had times in this market where something just happens and people look to find a reason to fit that event and it is often very misleading.

Ethereum (ETH) did retrace strongly on news of the hard fork delay but if we had been following the price over the past few weeks, we would have seen this happening regardless of the delay. Most of the time, fundamentals follow the technicals. If something is meant to happen on the charts, it is often backed by real world events. This is something that is backed by decades of trading in a large number of financial markets.

As the daily chart for ETH/BTC shows, Ethereum (ETH) ran into a historical trend line resistance and it could not have broken above it without retracing short term to garner the strength to break strongly above it. The price did fall below the 21 Day EMA which is usually not a good sign but it is ready to climb back up. We believe that soon as the Constantinople hard fork goes through with success, Ethereum (ETH) would be on track for a new, more aggressive rally in the weeks ahead.