- Ethereum was fairly noisy during the trading session on Tuesday, but what has caught my attention is twofold.
- We have the $3,000 level that has offered a little bit of support during the day.
- So, we'll have to see if that holds because $3,000 of course is a large round psychologically significant figure.
- This will quite often attract a lot of interest from options traders, and of course larger institutional orders tend to gather near these major figures.
Furthermore, we are overstretched according to the Bollinger Band indicator to the downside so a spring back could happen. I think the real signal will be if we can break above the 50-day EMA, which is basically the top of the inverted hammer from the Monday session. If we can break above there, then I think we can start to pick up momentum and see Ethereum take off back towards the $4,000 level.
Be Careful of Picking Bottoms…
As a general rule, I don't typically try to pick the bottom of a pullback, but this is a very obvious place that I think a lot of people are going to be paying attention to. With that being the case, I'll be doing the same. I would be more likely than not enter the market slowly and let the momentum build up and add as it proves itself to be a fruitful trade. If we were to break down below $2,800 then I think Ethereum might be in trouble. It would almost certainly go looking to the 200-day EMA which is just above the $2,500 level. Keep in mind that Ethereum is sensitive to what's going on in the Bitcoin market so if you are going to trade this one you have to watch that one as well.
Keep in mind there is a lot of talk about Ethereum ETFs hitting Wall Street, but we don’t have enough momentum yet to make that happen. Ultimately, I do think that happens and this is part of why some traders are “front running” the move, assuming that the same thing that happened in the Bitcoin market will happen over here.
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