Ethereum coiled and ready
With a lot of my focus (and everyone else’s) on Bitcoin lately, it’s easy to forget about its equally valuable little brother, Ethereum. While Bitcoin has done nothing but slowly increase in price slower and slower towards the $12,000 level, Ethereum has been consolidating into a smaller and smaller trading ranges on the 1-hour chart.
Ethereum is most definitely showing some consolidation here on the hourly chart. While the price direction is certainly different than Bitcoin’s, Ethereum and Bitcoin do share one characteristic: volatility is slowing down on the hourly. The swings are not as wide and it’s showing signs of indecision. For Ethereum, let’s look at what the chart is showing us.
- I am using Bollinger Bands (a measure of volatility) for this analysis because they give a very good indication of when we have entered a ‘Bollinger Squeeze’. Price is currently a little below the 20-day moving average and we are in a squeeze. Additionally, we are right on top of the VPOC (Volume Point of Control); thin red horizontal line. We are also right on top of an extremely important support zone.
- The DeMarker indicator here shows we are well below any more selling interest here, if price were to move, we would expect it to go higher based on this indicator.
- Ethereum is right inside the Value Area, the Value Area is shaded ‘darker’. The Value Area represent the Volume at Price where there is the most volume being traded at a certain price level.
The highest probability trade here is going to be a movement to the upside. It is not uncommon for moves like this, to begin with, a false move down to be followed up with a quick reaction and then a new trend to the upside. We can have a long bias because the location of price is at a strong support zone and because the DeMarker indicator is showing lower values that would support buying here. But be mindful of the Demarker indicator as time goes on. If we continue to trade in this narrow range and there is increase upside movement on the DeMarker indicator, the opposite could happen where we have a fake out to the upside and then followed by a new trend down. The biggest thing to watch for here is the DeMarker and see which direction it is moving and if it is in an extreme