Welcome Back! Let's now have a look at Ethereum vs Bitcoin!
Back on the 8th of April we finally broke out of the downtrend channel we had been stuck in since early February; and have now been trading within a much smaller uptrend channel. Looking at the 50 and 200 EMA we had a bearish cross over on the 3rd of April (red circle) though we have since confirmed the 200 EMA as support. Momentum also appears to shifting to the upside hinting at the possibility of a bullish crossover occurring within the next week.
Let’s however focus on what the 12 EMA and 26 EMA (as pictured below and subsequently) are telling us:
Back on 18th of April we had a bullish crossover of the 12 EMA short term moving average over the 26 EMA longer term moving average. The 12 EMA has since given us support and as it is aligned very closely with the bottom of the uptrend channel, we can confirm this as strong support. As of today’s writing we are testing the resistance of the 38.2% Fib level; and we need a break out with sufficient volume here to keep us within said uptrend channel. Provided we break through by todays close (or tomorrows at the latest) with supporting volume, we will surely continue our way up for a test of the 50% Fib level which has historically provided us with a descent amount of resistance.
Now let's have a look at our other technical indicators to see if they support an imminent breakout or a disastrous down break (which would likely send us back down to about half way through the 23.6% fib where we have strong support zone as identified by the bright green dashed support line).
The RSI (68) is showing continued strength behind the uptrend with a fair bit of room before we enter overbought (80) territory.
Aroon Up is well above 50 (78.5) and Aroon Down is still very low (14.25) – Indicating bulls have the edge here.
The MACD is trending above the signal line and momentum is building to the upside. These three indicators combined give us a good technical buy indication and thus a great chance that we can break through the 38.2% fib level that is currently holding us back. If this occurs it should see us rocket up to test the 50% Fib level.
So how to trade this? I am waiting for confirmation with supporting volume above the 38.2% retrace within the next 2 days. If this occurs I am buying within the green buy zone with stepped sell orders leading up to the 50% Fib level where a retest of resistance is fairly likely to occur. If we happen (not looking likely) to break to the down side of the uptrend channel then I am looking to see if the 38.% fib holds as support (in which case I will be buying here) and if it doesn’t (extremely unlikely!); then I will buy near the strong support line (with a sell order just before the 38.2% Fib).
In summary I am bullish once we have our confirmed breakout!
Cheers
