Ethereum (ETH) like most cryptocurrencies has been trading sideways for the most part these past few days but now the time has come to make a decisive move. Yesterday, ETH/USD declined sharply below the 21 day exponential moving average but it climbed back up to close the day above it. It started the next day trading above the 21 Day EMA and has so far held that level. This means that Ethereum (ETH) is not likely to fall below this level in the days ahead but would instead use this as support for a rally towards the top of the ascending channel after the Constantinople hard fork. There have been a lot of concerns regarding this hard fork and most traders are afraid to take a side before the hard fork goes into effect. This is because the Constantinople hard fork was delayed last time due to some security concerns.
So, traders are waiting to make sure that the hard fork goes as planned but we believe once the hard fork goes forth successful, ETH/USD is going to rally significantly towards the 200 day moving average and it is going to take the rest of the market with it for a strong rally. The Stochastic RSI on the daily time frame has been indicating the possibility of such a move for the past few days and we expected that this would coincide with the hard fork. It is pertinent to note here that it was Ethereum (ETH) that pushed the rest of the market during the previous rally, not Bitcoin (BTC). In fact, Ethereum (ETH) closed above the 50 day moving average and Bitcoin (BTC) closed below it.
As investors watched carefully which one of them is going to take the lead, ETH/USD proved to be dominant and it took the rest of the market with it for a strong rally. There is still plenty of room for another rally which we expect to take place after the hard fork. Now, looking at the weekly char for ETHUSDShorts, there are a few possibilities. Either the number of margined shorts will rise towards the 38.2% Fib retracement and face rejection somewhere along the way or the number of margined shorts will rise all the way towards its previous support during which time ETH/USD will have ample time to rally.
We believe the most likely scenario is that the number of margined shorts will decline in the weeks ahead to pave the way for another ETH/USD rally that could push the price north of $180. A less probable scenario would be for ETHUSDShorts to form a bullish gartley. This would mean that the number of margined shorts would rise steadily from current levels thus increasing the pressure on ETH/USD and limiting the odds of a successful rally to the upside. Things might be in favor of the bulls for a short term as ETH/USD is still trading under oversold conditions on the daily time frame but long term outlook calls for further decline to the downside which will eventually see ETH/USD reach its true bottom.
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