ETH TA 3/11/2019: Which way will the triangle break?

The last couple weeks have been full of volatility and noisy price action for ethereum. Looking at the 4 hour chart we can filter out some of this noise to get a sense of where we could be going.

ETH Technical Analysis Price Chart 3/11/2019.
ETH Technical Analysis 3/11/2019. Click to enlarge.

My last analysis was in late February after that massive dump from $164, at that time I mentioned how ETH needed RSI support to stay above 40 to remain bullish, you can see this was not the case as RSI trended between 30 and 50 before dropping down to the 0.4 fib level before a quick recovery.

That dip revealed an interesting trendline that started to form early February when ETH was around $100. There is also a diagonal resistance pushing down on ETH, forming a triangle with the major trendline. The question now is, which line will be broken?

As you can see in the chart, we are reaching the apex. Something big could be happening soon.

The strategy here is simple. We are looking for a clean break in either direction, confirmed by a break in the RSI with increasing volume.

Looking for some clues to which way it could go, I see we are at a critical support where the major uptrend is supported by the 0.382 fib level around $130. As expected, we got a bounce off this fib level as its been a support that has been holding strong for weeks.

Looking at the oscillators we can see the RSI is reaching some bearish levels, however we have a triangle pattern that is consistent with price action. The momentum MACD has broken its trendline support but is currently being held up by a secondary support, now potentially forming a double bottom.

If this double bottom holds, we will be looking at bullish divergence as price is making a higher low while the oscillator makes a double bottom. This signal combined with a break in RSI and good volume signals the uptrend will probably continue.

Overall ETH is looking weak right now. The 3hr RSI is low and the MACD is breaking a support. It will need to recover above the yellow trend line to remain bullish.

If it doesn’t recover and we see a break to the downside on the RSI it will signal the major trendline will probably be broken and ETH will correct further. All of the moving averages are tightening up, which also indicates the market is squeezing.

Bottom line: if we break up, we could see a retest of the $164 range. If we break down, I will be looking to take a small short position and accumulate long positions in the $125 to $120 ranges. A break in either direction will be confirmed with heavy volume and a break in RSI.

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