ETH Bloody Sunday: Where do we go from here??

After a week of huge gains, ETH drops 10% early Sunday morning. Are we actually in a bull market, or is this a massive bull trap?

ETH price analysis 2/24/2019. Click to download full size.
ETH price analysis 2/24/2019. Click to download full size.

First off, I was not expecting such a sudden move down, my longs were stopped out in profit and I missed the short opportunity. Looking at the 4 hour chart, I’ve highlighted the bearish divergence and failure swing that indicated the latest ETH uptrend was coming to a close.

As of now we have found support around the 0.382 Fibonacci level with a nice rejection forming on the latest candle with less than 20 min to close. So now the question is: are we back to bear mode?

Not so fast. If we compare the most recent uptrend to the previous one in December 2018, you will notice a strong correction (noted by the green arrows), what’s important here is that the RSI finds support around the 40 level.

With the RSI still in a range of 40 to 80+ I wouldn’t be ready to call this a return to bear mode just yet. Notice the previous uptrend found support at the 40 RSI below the 200 EMA and still managed to retest the previous high.

The most recent correction has also found support around the 40 line and price is still far above the 200 EMA, both of these are indications that I am looking for buy opportunities rather than selling opportunities.

I am looking for ETH to maintain this support around the 55EMA (yellow) with the RSI above 40. If we can manage to keep price above the 55EMA, cross above the RSI 50 line with a MACD crossover I will be looking for a retest of the $160 levels and possibly even $175.

If we fail to maintain support and RSI continues to falls below 40, the next potential area of support would be around $124 at the 0.618 Fibonacci level. A good indication that price will continue down would be rejections off the 55EMA (yellow) or 34EMA (purple).

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