TA: ETH 5-21-2018

Ethereum is currently consolidating in a very narrow range and nearing the apex of the horizontal resistance and the uptrend, it has been on a very good run vs bitcoin but we do notice it’s losing steam (RSI trending downwards). Because Ethereum has been trading in such a narrow range we expect to see a rather large move soon.

If we break the horizontal resistance line I expect a reversal of the uptrend into the retracement cycle in the heavy resistance zone. This would be an ideal place to lock in some profits and monitor how the chart develops. Once we are in the heavy resistance zone after an impulsive move the RSI should be in the oversold regions once more and would mark the completion of the third wave up after which we expect a retracement cycle.

If we however break the uptrend instead we expect to see a full retracement cycle to develop. Once we break the line for the retracement cycle confirmation ethereum might fall as low as 0.067 near the 618 retracement mark of the entire move up.


How do we play this chart?

We don’t have a position in Ethereum and currently the risk vs reward on a long trade isn’t in our favor so we are staying out of the market untill a better long opportunity presents itself. We do have a positive risk to reward ratio for a short but the conditions for it haven’t been met.
If we were already long we would watch the break closely. If we break towards the upside we would take profit in the resistance zone and if we break to the downside we would immediately take our profit and even go short when the retracement cycle confirms.

If we do break down look for a long setup near the confirmation line of the retracement cycle or near the 618 fib retracement line, the latter being the better buy opportunity as this would imply we’ve gone through a full retracement cycle and are ready to start a new uptrend.


Our current bias is leaning towards the downside and we are anticipating a retracement cycle soon. But as always wait for confirmation, trade what you see not what you think you’ll see.

please note that a break above into the heavy resistance zone changes our criteria for the confirmation and end of the retracement cycle and we need to re-assess the chart if we do break into this zone.


Summary:

break up, sell: 0.0894 – 0.0101

break down, short: 0.0779 | target: 0.0699 – 0.0661 | stop: 0.086

after retracement cycle confirms look for longs:

0.0699 – 0.0661


 

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