On Wednesday I posted a continued analysis of the ETHUSD pair. We have been focusing on some primary areas of where price is approaching and the different trade setups that could be formed. Over Thanksgiving and today (Friday, or, Black Friday) we have a clear and absolutely monstrous breakout of an area of resistance and also out of a rising wedge (which usually has a bearish bias). At the time of writing this article, ETHUSD is up over 15% or $62.88.

 

  1. This was the area we focused on for almost all of last week and prior. The black horizontal line represents an area of resistance in both price and time, it also is a confluence area of a harmonic level (not drawn, but is almost on top of this horizontal black line).
  2. This is very telling and very important. The blue horizontal line represents the end of an ascending harmonic series and the beginning of a brand new octave of price engagement. What we also have is the end of an important Gann time cycle right on the breakout of where the number 2 is.

Things to watch for

  1. Instruments that trade regardless of major holidays are very difficult to trade, especially if they are trending. Your’s truly does not enjoy these kinds of market movements. They are generally slow, but deliberate and can cause a great many fakeouts on faster time frames. Traders who have attempted trading equity futures like the ES or NQ during the summer will feel right at home with the frustration of these kinds of trading days!
  2. What is interesting, and what continues to be something we should all analyze on our own, is the volume. It is understandably weak and lower due to the holidays. However, it is astonishingly consistent and flat. Traders who have been in other markets for a long time will tell you that these kinds of moves have a good probability of reversing on the following Monday. Cryptocurrencies seem to be dismissive of the volume component as it relates to price movement. For now, I feel like there have been to many instances where volume should have confirmed a move or a change in trend, but the opposite has happened. This tells me that for at least right now with cryptocurrencies, volume seems very moot. So perhaps it would behoove traders to ignore volume in both VPA and VAP (Volume Price Analysis and Volume At Price Analysis).
  3. Regarding the Renko analysis, we can see that we have had some pull-backs on price. There have been three of these pullbacks (the red bricks) above the black horizontal resistance line. These pullbacks have been met with buyers in every instance. What this tells me is that we had a lot of buyers waiting for confirmation (this was one of our trade ideas on Wednesday) of a break and hold above that resistance line.

Trade idea

  1. If we use the behavior of price action since the breakout, we should consider buying on any pullback. The momentum to the upside while slow and deliberate has been void of any strong commitments from sellers. And remember: Etherium is going to get a futures contract from the CME (Chicago Mercantile Exchange) and the CBOE (Chicago Board Options Exchange) just like Bitcoin is. From a very simple risk VS reward situation here, Etherium has significantly more reward. In other words, your max loss as of writing this article is 470 per coin VS great than 8k for Bitcoin.