The price of Ethereum has been going south since January’s closing price. Developer adoption has not yet been able to find a lasting solution to the scaling issues of the network via the proposed Constantinople upgrade. Speculative adoption, on the other hand, has been profiting greatly from this drop. Read for a deeper understanding of the technical setups we consider to be of high probability when analyzing Ethereum time series charts as well as any other charts for that matter.
Technical Analysis of ETHUSD November 2018
ETHUSD November 2018: Monthly Chart
Referring to the above monthly chart, just like every other alt-coin/cryptocurrencies, the price of Ethereum was in a highly volatile bullish rally. On the 1st day of October, price broke out of the inside bar pattern sending the price to a 238.1% profit target that lasted till the closing price of January, compared to a 40.00% risk exposure. The month of February closed bearish signaling a false break reversal pattern.
The month of July is where price resumed its bearish trend in the form of consecutive bearish bars by forming a bearish accumulation pattern. This move offered a good short trading opportunity with a tight risk exposure of about 21.94%, compared to a take profit of about 43.88%, being the first profit target. At the first profit target which is already hit, the trade was entered with a risk to reward ratio of 1:2. The third profit target cannot be entered at this timeframe since we need to quantify and establish our risk exposure. With that said we move to the weekly chart for a better view of the price dynamics.
ETHUSD November 2018: Weekly Chart
We can see that the weekly chart being another variant of the ETHUSD time series, offers tighter stop-loss trading setups. Starting from February 5, price breaks below the inside bar pattern, leading to a series of bearish closing bars. Upon hitting the 65-period moving average, price bounced back up into a mid-term bullish trend in the form of consecutive bullish closing bars on April 02.
The bearish accumulation pattern formed on 14th May spelt an end to the consecutive bullish closing candles, offering a trade opportunity with a risk of 17% compared to a 40% reward.
Moving forward, price again broke below a bullish accumulation pattern on August 06, with a risk of 30% compared to a 60% profit target that’s not yet hit. The closing price of October 1, signals a more recent bearish accumulation pattern which has a good probability of making a trade of 1:1 risk to reward ratio (17.67%:40.0%), as well as triggering the take profit of the August 6 trade.
ETHUSD November 2018: Daily Chart
Moving a little lower to the 4hr chart, we get a slightly different outlook to the pair as it shows deeper oscillatory motion of the pair. After a bearish accumulation pattern formed on September 04 that sent the pair tumbling down to a 40.2% price drop, price formed a regular bullish divergence as well as a breakout of a bearish accumulation pattern on the same date.
The breakdown of bullish accumulation pattern indicated that buyers are throwing in the towel, as price later tumbled down at the formation of a bearish hidden divergence pattern. A sudden bullish thrust came up as a result of the fundamental release of the Constantinople upgrade on the 14th of October. Following this bullish thrust is a breakdown of the bullish accumulation pattern.
ETHUSD November 2018: 4-HOUR Chart
The above 4hr chart illustrates an early breakdown of a bullish accumulation pattern formed on the 15th of October. October 17, also triggered a breakdown of bullish accumulation pattern sending the pair south.
Conclusion and Projection
ETHUSD November 2018: 4-HOUR Update
As an update to this chart, a failure of bullish growth on the 4hr chart, on 29th October to be specific finally causes the pair to plummet by 3.5% compared to a 1.25% risk. Zooming out to the daily chart shows a similar buildup of a collapse of bullish accumulation which we project to move 30% in the bearish direction, with a risk of 3.5%. The bearish accumulation pattern formed on the weekly chart aligns with the daily bullish price breakdown, which is expected to trend lower, with the same projection, as the price approaches the months of November and December.