A tail of two coins, Bitcoin and Ethereum holiday recap
Both Bitcoin and Ethereum had some significant price movement from Thanksgiving Day to Sunday (Nov 23rd – Nov 26th). A common theme in markets that continue trade during major holidays is that they behave differently, this something I touched on last Friday. During Holiday periods like Thanksgiving, markets will usually only go one direction without any pullbacks, or they may just range without ever entering a particular trend. Those kinds of conditions are very frustrating and sometimes the best thing to do is not trade it. But let’s take a look at what happened with these two coins.
1. BTCUSD gained about 19.46% from the 23rd to the 26th. There was a clear absence of not only sellers but the conviction of any sellers. We are very close to the psychologically important 10,000 level.
2. Price is currently showing some bearish candlestick formation, but the volume on these is not what we would like to see for any indication of a sell-off.
3. The RSI still shows overbought on the 8-hour chart, but remember: in a trending market, an RSI can stay in overbought territory for a long time.
What to look for
The volume of selling is nearly non-existent. We would need a very convincing well above average volume bar at a swing high to confirm any real change in direction. Any dip in price continues to be bought. Don’t fight the trend!
1. Like BTCUSD, ETHUSD has found some significant movement to the upside. In fact, ETH went up an astonishing 27.8%. Unlike BTCUSD, we did have some responsive sellers at times and we began to range over the weekend.
2. We do have the RSI at overbought levels and it may cross that 70 threshold.
3. I drew a possible head and shoulders formation here. This is just a general idea of what the formation may be, not how it will form of where it will form. I am personally not a fan of these kinds of patterns, but there are many traders who like to see them. Also, notice the horizontal lines, this represents the bottom of the volume value area. We have a vacuum below this line, so expect some fast movement down if it breaks and holds this level.
What to look for
ETHUSD is a pair that I believe is more responsive to normal market behavior. As such, it makes it more interesting. BTCUSD is another beast. It’s an anomaly because it is such a pump and new driven instrument that we need to wait for weak hands to let go and find some equilibrium in the structure of it.
ETHUSD may have that same problem, but currently, we are seeing nice levels of profit taking and supporting volume at the highs and lows. ETHUSD does still have a lot of upside potential with the 500 area being the next important high. Any selling volume or closes of candlesticks with lower than average volume are still great buying opportunities.