by Jamie Holmes
First, there is a strong indication of an extended downward move as the conversion (blue) line is starting to trend downward; a 4-hour close below the conversion line will give further confirmation and see the market test the $8 psychological level again. This level is aligned with the Ichimoku cloud which indicates a support zone. The conversion line is currently offering minor support at $9.3191 and if the market closes below the conversion line we should see the price action tend towards support provided by the Ichimoku cloud just below $8.
Moreover, the Ichimoku cloud is currently green suggesting buyers still have control of the market, but the cloud looks to be changing color to red. When the color changes to red this will give a stronger probability of a longer downward trend emerging. The most recent fractal levels are also indicated on the chart by the dotted yellow lines. Support is found at $8.43 and a sustained break below this level will see bearish momentum dominate. Resistance is seen at $10.2082 and would switch the long-term outlook to bullish. Also, the base (dark red) line is currently providing support as well, currently at $8.905. A 4-hour close below this level will indicate a shift toward bearish momentum.
Finally, the MACD (Moving Average Convergence Divergence) indicator displayed at the bottom of the chart indicates shifts in momentum and current momentum in the market. The faster-moving average (blue) crossed below the slower-moving average (orange) signalling a shift to bearish momentum; this suggests it is best to look for opportunities to short ETH-USD. Those bullish on ETH-USD should wait for an upward cross-over in the MACD or alternatively wait for the market to test support provided by the base line or fractal support.
The short-term outlook is illustrated below with the hourly price action on the Kraken exchange. We can see that the market is within a tight range between a fractal support at $9.31663 and fractal resistance at $9.80. Market participants should pay attention to the hourly close and these levels; a close above $9.80 would signal a bullish break out and would see a sharp movement upward over the short-term. On the other hand, an hourly close of the market below $9.31663 would see bearish momentum intensify, causing the market to nosedive. The base line is also providing support just above this level at $9.3191. A bullish outlook is only validated if the market manages to close back above the conversion line, which is currently offering minor resistance at $9.5582.
The risks are more skewed to the downside as we see that the conversion line has provided resistance over the past few hours after previously acting as support. Also, the price action looks to be plunging below the Ichimoku cloud giving a potential bearish signal once the market closes below the cloud. Also, the MACD indicator at the bottom of the chart looks to be making a downward cross-over soon and will indicate a fresh round of bearish momentum forcing the market lower.