Ethereum (ETH) bounces off support found near-critical technical levels. Follow through trading will confirm a new swing low.
Ethereum (ETH) bounces back big
Ethereum’s (ETH) Big BounceIf you haven’t looked at Ethereum’s (ETH) weekly candlestick, you should take a look at it. It’s ugly. It’s hideous – unless you are a bear. Ethereum traveled nearly -24% lower last week, moving from an open of 183.88 to a close of 139.99. Monday (November 25th, 2019) selling pressure continues with Ethereum pushing new five-month lows to tag the 131.80 value area – but that’s where it stopped. Once Ethereum traded down to the 132 value zone, it bounced. And there are several reasons for this. The Volume Profile on the right measures the time period from the 2018 bear market low to today. The red horizontal line the black arrow is pointing at is the VPOC or Volume Point Of Control. This is the price level where the most amount of Ethereum has been traded. Just a little below that level is the 78.6% Fibonacci retracement from the 2019 swing high of 317.40 on June 25th to the confirmation higher swing low of 100.15 on February 6th, 2019.
In addition to those key price levels above, some important Gann day counts should be observed. First is the 144-day cycle. Today is 153-days from the June 2019 swing high. 153-days falls into the 144-day Gann Cycle of the Inner Year. Gann wrote that the 144-day cycle is an essential one to watch for terminations in trends.
Along with the 144-day cycle is the 135-day cycle. Today is 132-days from the first significant swing low from the June 2019 high. The 135-day cycle is important in Gann’s work and one he provided a good amount of information on. The 135-day cycle can often be a lower low, which ends a bottoming pattern. Gann further wrote that the 135-day cycle should always be watched for changes in trends and that fast moves can start. He did warn that the cycle can initiate steps that consist of low to lower lows or high to higher highs. So, how likely are we to witness a move up from this daily bounce? That would depend on the price action. The next major is the final 360-day cycle, which ends on December 8th, 2019. Give the proximity of these new major swing lows to that date, and we could certainly see a justification for Ethereum to start a new leg higher. But we need to make sure that price action is confirming a move higher. Days like today have historically been bearish. I say that because days like today are very indicative of something known as a relief rally. We may be witnessing a large number of traders who are/were short and have been covering throughout the trading day. The number of those covering their short positions could be added to if there are enough new traders who have a classic case of FOMO (fear of missing out). I believe that for us to get a confirmed new bullish leg higher, we need to see this current weekly candlestick close above last week’s candlestick – we need to see a blatant and explicit rejection of any further selling pressure.