by Jamie Holmes
After attempting numerous times to break psychological resistance at $10.00000, ETH-USD looks as if it is preparing for a nosedive. The price is currently trading at $9.35006 on the Kraken exchange, hardly changed on today’s open. The chart below shows the 4-hour price action on the exchange and illustrates that the market is currently within the Ichimoku cloud at this timeframe. This suggests that a breakout in either direction is imminent. However, if we study the chart closely we see that the risk is more weighted to the downside.
First, the price action is trading below the conversion (blue) and base (dark-red) lines; they are both offering minor resistance at $9.4065 and $9.3990 respectively. Also, both of these lines are starting to trend downward, suggesting the market is getting ready for a big move down. Also, the most recent fractal levels are indicated on the chart and are key resistance and support levels going forward. A break below $9.2135 will see bearish momentum dominate whereas a break above $9.5000 should see bulls dominate.
Moreover, notice the Ichimoku cloud has started to change color from green to red, suggesting that a downward trend is starting. The cloud should now act as resistance instead of support going forward, and an extended downward move is expected if the market breaks below the cloud.
Lastly, the MACD indicates momentum in the market and has displayed a downward cross-over of the moving averages suggesting momentum is shifting in favor of bears in the market. The histogram has also turned negative and this suggests that sellers will be stronger going forward and hence there is more downside risk to ETH-USD. $8.9780 and $8.4300 will act as initial targets for sellers.
The longer-term outlook is displayed below with the daily price action of ETH-USD. The MACD has also displayed a downward cross-over today providing a bearish signal. Also, notice that the market is very close to the Ichimoku cloud which provides resistance. This suggests the market will move to the downside and tend toward fractal support at $7.2186. Resistance is seen at $10.44999 in the long-term and a break above this level is needed to validate a bullish outlook.
Sellers will look to target support provided by the base line currently at $8.7750. The market moved below the conversion line yesterday and has remained below this level so far today. This indicates that sellers are starting to gain the upper hand and that the conversion line will provide resistance going forward. A daily close above the conversion line is required to validate a long-term bullish outlook. Otherwise, we should see the market drift lower as we are currently closer to a fractal resistance and touching the resistance area provided by the Ichimoku cloud.