Bitcoin
Ethereum (ETH) Price Analysis: Classic Head & Shoulder Pattern Forming
Over the last week or so, most of the cryptocurrencies have been trading downward off of sustained uptrends that have seen many of the cryptocurrencies including Bitcoin, Litecoin, Ripple, and Ethereum make extraordinary gains.
Even though the cryptocurrency market is traded throughout the world, 24-hours a day, 7-days a week, it seems that a cryptocurrency wide market correction is taking place amid the Holiday season in the United States.
With the U.S. market accounting for a large portion of the overall trading volume in the cryptocurrency market, the volume indicators on most of the heavily traded cryptocurrencies are showing a significant decrease in trading activity.
The lack of volume, along with the extreme overbought conditions that the market has been exhibiting lately, may account for the sudden price reversals that are forming throughout the market.
Ethereum made its last all-time high of $870.00 on December 19, 2017, resulting from a strong surge in price following an important announcement by UBS that they will head an Ethereum-based Blockchain initiative along with Barclay’s, Credit Suisse, KBC, Swiss stock exchange SIX and Thomson Reuters.
The initiative is designed to help these companies comply with new European Union trade data standards that go into effect in 2018.
Since then Ethereum has retraced as far down as $501.00 on December 22, 2017, and is now in the midst of a recovering, currently trading at $754.00 at the time of this analysis (Refer to Chart #1 below).
Chart #1: Daily Price Chart
Ethereum is currently showing strong signs of a classic head-and-shoulder reversal pattern.
Several other cryptocurrencies including Bitcoin, Litecoin, and IOTA are exhibiting similar reversal pattern characteristics.
The fact that this phenomenon is not limited to Ethereum is highly indicative that the cause of the reversal pattern(s) is being manifested from something that is being driven by the market as a whole, as opposed something that is affecting each individual cryptocurrency differently.
In this case, the lack of volume is currently the common theme among the cryptocurrencies, and most other markets during the holiday season.
Chart #2: 15-minute Chart
The 15-minute chart shown above (Chart #2) clearly shows a significant decrease in volume.
Also shown is the resistance level that Ethereum is currently trading.
This resistance level is key to the completion, or disruption, of the head & shoulders pattern that is potentially emerging.
If price breaks through and makes new highs, then the pattern fails.
However, making new all-time highs usually requires higher than average volume; something that will probably not be seen until after the new year. If the resistance level holds, then the head & shoulders pattern may come to completion, and a further retrace may take place.
We will be watching closely.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
Image courtesy of Duncan Rawlinson via Flickr
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Bitcoin’s price slump is mirrored in the wider crypto market, with the global crypto market cap decreasing by 1.85% over the past 24 hours to $1.55 trillion. The total crypto market volume has increased by 32% over the same period. The Crypto Fear and Greed Index has plunged from a level of extreme greed to a greed level of 70, suggesting a decline in risk appetite.
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