In recent weeks Ethereum has been on what seems like a relentless slide. It's hard to comprehend that only two months ago the price was trading two and a half times higher. However, during this sell off it was noticeable that the daily volumes remained fairly light suggesting two things. Firstly investors seemed to be, I wouldn't say happy but, prepared to hold onto their coins for the long term. The second thing to note is that this suggested we had not reached a level of perceived good value, or bargain territory. If we go back to the last very high volume day, which was the beginning of the rally back on the 11th of December last year, we can see that this began at the 518 level. So this is where we were looking for investors to wake up again. This is exactly what we have seen over the weekend, and despite spiking down to a low of $ 450, we actually closed all the way back up at $ 538 leaving us with a hammer candlestick.
Ethereum daily chart and a closeup of yesterday's hammer.
There are many reversal signals in candlestick charting and a hammer is one of those. What Chartists look for is a small bodied candle (the coloured part which is the difference between the open and the close) that appears at, or near the top of the days range. This is the head of the hammer! They also look for a long lower wick (the thin line showing how low we traded that day). This forms the handle and it is said that the market is hammering out the bottom of the bear move. As with many candlestick formations confirmation is required to increase the potency of the signal. To do this we would now need to see a green candle with a closing price above 575. Even so, the pick up in volume, coupled with the Relative Strength being in oversold territory, suggests there is good reason for hope in this market.
