Ethereum: The cryptocurrency that's following the rules

When a drop target is broken, it's often a sign of more bad news to come. Our chartist explains.

Ethereum USD

If we're sometimes sceptical regarding bitcoin, our thoughts on Ethereum were magnitudes worse. The good news was the recent Ethereum drop.

Last week brought an email from someone going to buy at $260 and we'd strongly advised against. We suspected $200 coming. Today's email; "OK, you're a genius...  $200 has been hit!"

It was easy to decide this gave justification for a proper analysis. A fake coin following "the rules" tends be a rare event.

If this is indeed the case, Ethereum now has a serious problem as it managed to trade below the $200 level during the session, hitting $190 twice.

When a drop target is broken, despite near-term recovery, we get nervous as it will often signal more reversals are coming.

Now, for Ethereum - $211 at time of writing- below $190 looks capable of $163 initially, doubtless with a short-lived bounce.

Critically, if $163 breaks, our secondary calculates at a bottom of $95. Visually, this rather neatly matches the lows at the start of 2019 and will doubtless serve as an excellent trampoline level at some point in the future.

We now cannot calculate anything below $95 and this further reinforces bounce potentials, If $95 makes an appearance.

As always, perhaps we're being hysterical, but we often feel an exchange, based on the daily pollen count measured from the roof of the London Stock Exchange, would prove to have greater integrity than trading in cryptos.

Despite repeated small signals of market attitudes changing, for as long as daily swings in crypto prices tending to occur regardless of trade volume levels, we prefer caution.

However, as an olive branch, there is a chance $200 was indeed bottom and the currency will bounce.

That being the case, we need the price to exceed $227 (allegedly the immediate target) as this should trigger recovery to an initial $255.

If exceeded, secondary is at $280 and a visual challenge against the blue downtrend. Only with closure above $280 shall we suspect a true miracle is in progress, thanks to $352 being our first breakout target upward.

In summary, we suspect this intends to wind its way to $95. The caveat, and initial integrity test for any rise, comes if $227 bettered.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.