Ethereum (ETH) has been trading sideways for the past few weeks to no avail. The price has neither gone up nor come down but only traded further along the ascending triangle it has been trading in. This ascending triangle also forms part of a large bear pennant which means the price is likely to decline significantly should it fall below this triangle. That being said, Ethereum (ETH) bulls are still hopeful about a bullish reversal that could kick in if the 50 day moving average crosses above the 200 day moving average to form a golden cross. This golden cross could see ETH/USD break above the ascending triangle and might change the whole scenario completely. However, given the current outlook of larger financial markets as well as that of the cryptocurrency market itself, we do not expect that to happen.
The price of Ethereum (ETH) could rally to the top of the triangle before it comes down. Alternatively, we could see a rejection at the 200 day moving average which might accelerate the decline. However, any hopes of a sustained rally to the upside would be nothing short of wishful thinking at this point as the price is massively overbought on both the daily as well as the weekly time frames. The SEC recently delayed its ETF decision on the Bitwise and Van Eck proposals which should be another strong indicator of what is to come next. The CBOE recently dropped trading of Bitcoin (BTC) futures and as the market plunges further into the red, we expect the CME to do the same. It is no secret that both CBOE and CME futures have had a major impact on the price of Bitcoin (BTC) during the recent bear market. If the CME ends up pulling the plug on Bitcoin (BTC) futures we might see some bullish recovery. The CME’s decision to do that could coincide with the true bottom.
The number of margined shorts has declined significantly over the week and has now tested the previous support. The weekly chart for ETHUSDShorts shows just how much the bearish resolve has been weakened since the beginning of the year. Whether or not the bulls have capitalized on this weakened resolve of the bears is another debate. If we look at this chart, we can see that ETHUSDShorts topped once around September, 2017 and later around November, 2018. There is a strong possibility that we might see a new all-time high in ETHUSDShorts before Ethereum (ETH) bottoms out.
As the number of margined shorts has now fallen back to its all-time low and ETHUSDShorts is massively oversold on the weekly time frame, we can expect some bearish comeback that should put the price of Ethereum (ETH) under increased sell pressure in the weeks and months ahead. While this may not necessarily mean that Ethereum (ETH) has not bottomed yet, it does indicate that further downside is yet to come nevertheless.
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