by Jamie Holmes
ETH-USD was cut short of our target at $16 with the market only managing to establish a fresh high above $15. Since then, volatility has increased markedly as the philosophical rift between Ethereum Classic and Ethereum continues to play out in the market. Exchanges have started to list the alternative Ethereum blockchain that did not reverse the DAO hack under Ethereum Classic (ETC), which has seen a huge increase in volume. ETC’s price is up over 360 percent against Ether today on the Poloniex exchange. The main crypto pairs are all in the red today with the exception of the ETC pairs, XBT-GBP and LSK-ETH.
The 4-hour price action is shown below for ETH-USD on the Kraken exchange. It illustrates a strong sell off today with the base (red) and conversion (blue) lines starting to sharply trend lower. The market is currently testing psychological support at $12 and the support zone provided by the green Ichimoku cloud. A 4-hour close below the cloud will most likely see an extension toward fractal support at $10. As shown below, this area saw buying interest and we expect a rebound, at least temporarily, around this level.
Also, notice that the Ichimoku cloud is starting to change color to red, also giving an indication of further losses in the days ahead. This is also supported by the volume indicator; the higher volumes signal that the market is more able to facilitate moves to the downside. It indicates that more people are entering the market and interest in a further move downward.
The most recent fractal buy level gave the first indication of this downward move but now this fractal level is offering resistance at $13.07018. It looks as if the price action will move below the cloud. As a result, long-term buy positions are only suggested once the market is able to close back above the conversion line which is currently offering minor resistance at $12.69.
The chart below shows the 4-hour price action for ETC-ETH on the Poloniex exchange and shows the huge increase in volume. Since it is a new cryptocurrency pair, the Ichimoku indicator has not yet fully developed. The conversion line is trending upward suggesting bullish momentum over the short-term. The market needs to continue to establish 4-hour closes above the conversion line, currently at 0.1664, to maintain the bullish momentum.
Otherwise, we should see a change in direction. Moreover, the current 4-hour candlestick shows that buyers tried to push as high as 0.3000 but were shut-down by sellers with the market retreating to around 0.1800 at present. Therefore, this indicates a higher likelihood of a downward move as buyers become exhausted.
Given that ETH continues to decline, LSK-ETH will look to push above the resistance zone provided by the Ichimoku cloud. Moreover, the current session shows a rejection of the most recent fractal support at 0.0207 suggesting a higher probability of an upward move. This will be further confirmed with a break above fractal resistance at 0.0236 after which we should see the market move above the cloud towards 0.026.