After 10 weeks of violent selling the crypto market finally showed a first sign of life last week. It is easy to get influenced by, especially in fast moving crypto markets. While we do like the recent price action we also do realize that a bullish trend requires much more than a few days with a green candle. In this short article we show what we like about Ethereum, particularly. Ethereum is not a prime candidate to become a unicorn in 2022 (as per our latest crypto predictions we expect crypto to remain extremely bifurcated this year). Still, we start liking what we see.
First of all, one day does not make a market.
No matter how much we liked the 8% candle on Friday, February 4th, it is nothing more than a healthy sign. BTC is not in a bullish trend at this point in time.
We explained this in great detail in our last crypto investing research note: our algorithmically calculated bull market price comes in at around 45.9k in BTC. We are well below this level at this point in time so there is no bull run in BTC, not yet.
ETH broke down in December, and its breakdown got confirmed late December/ early January. The daily chart below visualizes the breakdown (yellow circle).
The subsequent decline in ETH was close to 47%.
Note that this breakdown was not a simple violation of “a” trendline. It was THE 20 month bull market trendline that got violated, a really important trendline. Consequently, the decline that follows must be violent, market dynamics 101.
As seen on both charts, above and below, ETH is (a) bouncing strongly from its June/July reversal breakout level around 2300 USD (b) close to hitting resistance).
This setup really makes sense to us, we believe ETH is going to try and print a W reversal. The market will have the last word, we can only make a projection at this point in time.
We expect ETH to hit resistance in the next week or so, right at the falling trendline visualized on below chart. The million dollar question will be where it will find support (assuming it will re-test its January lows). IF, and that’s a big IF, ETH succeeds in respect its January lows, we see a strongly bullish setup. We believe the 2300 area would be a great entry point.
This assumes that ETH will not fall below 2200 USD. As per the classic investing dilemma there is no way of knowing, upfront, which the one perfect entry point will be. That’s why a projection like the one we are making in this article is so helpful. It helps track the bullish outcome vs. the invalidation thereof.
The charts in this article were published in our last research note to premium crypto investing members. Ethereum is one of the coins we will be tracking closely, and we will flash a buy alert if and when we believe appropriate. Our premium crypto members will receive this buy alert whenever we believe the market is confirming it, presumably in 4 to 5 weeks from now.
