by Jamie Holmes
Virtual currencies slumped to fresh lows as the DAO, a decentralised organisation built upon the Ethereum blockchain, was attacked earlier this morning. BTC-USD and ETH-USD both sustained large losses with Bitcoin now trading around $740 while ETH-USD posted a low of $13.511 on the Kraken exchange. It was suggested that attackers exploited a vulnerability in the organisation’s software and allowed them to ‘drain’ millions of Ether from its $130 million stockpile.
The community initially responded by spamming the network to slow down the attacker; DAO-BTC and ETH-BTC then saw dumps as it appeared that the attack was still on-going. It then became apparent over 3.5 million Ether had been drained from the DAO; this attack was on the DAO code and Ethereum is still working as it it supposed to. The Ethereum community was able to show good mobilization as exchanges, miners, experts in the field and the Ethereum foundation came together to mitigate the attack.
Following this, the Ethereum foundation published a statement describing a solution to the attack whereby a hardfork could to be used to retrieve all stolen funds. A soft-fork will be available in the meantime and miners can download this code to continue running operations as normal. Kraken was temporarily down but has now continued trading. The community’s swift solution has seen confidence restored in markets with ETH-USD bouncing from its low at $13.511 and establishing higher highs.
The price action had retraced to the low from last week at $13.77 but is currently trading at $17.77 on the Kraken exchange, down 13.27% on today’s open. The chart below shows the short-term outlook for ETH-USD with the hourly price action. The market has recently closed above both the conversion (blue) and base (dark-red) line indicating a shift to bullish momentum; these should now provide support around $17.50.
However, the price action is still below the Ichimoku cloud and further bullish confirmation will be given when the market manages to break above the cloud, that is, above $19.01. The cloud region is currently providing resistance in the area of $17.995–$19.010. The chart shows that a fractal support level was formed at $13.511. The most recent sell fractal is at $21.48995, the fresh high posted last night. Therefore, if the market manages to cross above the Ichimoku cloud, we should see another attempt at $21.50.
The long-term outlook is shown below by the 4-hour price action. At this timeframe, the price is still above the Ichimoku cloud, signaling that buyers are still in control. Immediate resistance is seen at the $18 psychological handle. The chart below shows that the market has found support around the base line at $17.50. The conversion line and base line are currently at the same level, so we should wait for a crossover for further confirmation.
For example, buyers should look for the conversion line to start trending higher than the base line to enter long positions. Fractal resistance is seen at $19.09999, and a 4-hour close above this level is required for a stronger bullish outlook. On the other hand, a 4-hour session close below fractal support at $17.60 should see bearish momentum dominate.