As was expected, Ethereum has reached the minimal medium-term targets. The price is more than 20% down. Will the fall continue?
ETH/USD
After Ethereum has rebounded from the diagonal channel near $13, Ether had two options: fortify at $13 and form the third wave towards $15, or fortify at $11.5 and go down to the bottom limit of the long-term flat.
The market has chosen the downward scenario. The medium-term downward trend has been forming since late September. It’s at the level of $11.5, where the future structure was decided: either the flat could end and be followed by powerful growth, or it could continue with a strong fall. Ultimately, the downward trend, which has started at $14.5, has reached its minimal target, and is now a proper wave of the long-term flat, which has started as early as this summer, following a powerful fall of Ether’s price. That flat is clearly observed by the majority of traders, as are its limits. In order to determine the borders of this sideway movement with higher precision, we need to find the starting points, from which the price has been forming this trend in the past.
The limits of this long-term flat are also confirmed by the buy and sell stop-orders in that area. As can be seen, there are large volumes currently concentrated there. The traders expect to buy or sell Ethereum at the peak points of the price, hoping for a new wave of the flat to form. That tactic is a popular one. However, placing stop orders at those levels is highly risky, because any big player can take advantage of them - just as it has happened at the level of $11.5. For the majority of traders, the point of $11.5 was the peak of a rebound towards the $7.5-$14.5 upward trend. Because of that, there was the largest accumulated volume of buy orders in that area, as opposed to the bottom limit of the flat at $9.5. This has resulted in a great opportunity for a big seller to get rid of the largest volume of Ether beyond the $11.5 line. After that, they could buy it back from the same traders, which would be afraid of a possibility of an even more powerful fall, and would start selling near $10. That’s why this whole situation is resulting in the price going from one technical level to another.
At the moment, the most prominent trend is a downward one. For the price to make a turn, it has to break through a key level at $12.5. As we can see, there are large volumes of sell orders at the crossing point of the Fibonacci 38% retracement and the diagonal channel, which confirms the importance of that resistance line. The $12.5 mark is the most likely peak for the rebound towards the downward trend, which has started at $14.5. Because of that, that area can be a starting point for either a further turn upward towards $14.5, or a new fall towards at least the $9.5 limit of the flat. The behavior of Ether’s price at that level is important. If the graph manages to fortify at that mark, there will be a chance for a turn to growth.
ETC/USD
Ethereum Classic’s price keeps falling. A fortification at the bottom limit near $1 was indicative of the lack of bulls. Consequently, a turning wave has formed, and the price went down.
As we have said earlier, the downward trend will continue for as long as its structure stays intact.
Also, judging by the stop orders, the current largest volume is formed by the sell orders. Because of that, we should only expect growth after the price reaches a zone, which is profitable for the bears, and stays there. That zone is situated in an area where the structure of the downward movement from $1.25 breaks. That is why if the price fortifies near the crossing area of the Fibonacci 61.8% retracement and the diagonal channel near $1, it will indicate that the balance of power is shifting towards the bulls.
Key technicals where a change of trends is most likely:
- If Ethereum fortifies and forms a turn at $12.5, it will have a chance of growing to $14.
- If it fortifies and forms a turning wave near $1, Ethereum Classic will be quite likely to reach $1.10-$1.15.