VAP Analysis confirms the weak resistance volume zone ahead.
Near term support is precarious, caution should still be maintained.
Ethereum’s Volume Profile
Ethereum (ETHUSD) Volume Profile.
VAP (Volume-At-Price) Analysis provides a measurement of how much of something was traded at a particular price. These levels offer sturdy support and resistance levels. Areas where significant amounts of volume have traded, are called high volume nodes. Areas, where volume is vacant, is known as low volume nodes. The chart above is Ethereum’s daily chart beginning at the top of the 2019 market on June 27th, 2019. The highest volume node on this chart is between $170 and $190, with a near equal distribution of volume occurring in those price zones. The next high-volume node is within the same deviation (First Deviation, gold-colored bars) and is between $210 and $215. It is the area between the two high volume nodes that are of particular importance.
The letter A represents the price ranges between $190 and $210. Because this volume range is less than the high-volume node above and below, this area is known as a low volume node. I sometimes call them volume troughs. Where high volume nodes represent a source of equilibrium and strength – an agreement among bulls and bears of fair value – low volume nodes offer weakness. Trading with the Volume Profile has a particular strategy that involves identifying breaks above or below high-volume nodes. This is where low volume nodes become essential. When price breaks above a high-volume node and enters a low volume node, the low volume nodes act a sort of vacuum and suck price up or down towards the next high volume node. These kinds of moves are often met with little resistance and can result in flash crashes or flash spikes.
If Ethereum can breakout and close above the $190 value area on the daily chart, this will more than likely result in a flash spike towards $125. This move would be very complimentary to those who utilize the Ichimoku system. One of the last and principal conditions for any bullish breakout of the Cloud is when the Chikou Span moves and closes above the Cloud. All other conditions that exist in the Ichimoku system point to impending bullish terms for a long-term time frame. The Future Senkou Span A needs to cross above Future Senkou Span B along with the Chikou Span above the Cloud are the final two conditions for a new bull trend. But traders should be aware of the near term bearish conditions.
Ethereum (ETHUSD) dangerous bearish levels ahead.
The chart above shows Ethereum’s weekly chart. The blue horizontal line at $147.50 represents the final breakdown level on Ethereum’s chart. As bullish as the condition on the daily chart is, the weekly chart shows how quickly and easily Ethereum could collapse. The ideal bearish breakout on an Ichimoku chart is much easier to accomplish on the weekly chart than a bullish breakout. If price moves down to $147, then two final nails in Ethereum’s bullish coffin will be complete. A move to $147 means both price and the Chikou span have broken below the cloud. But the Chikou Span will have move below the candlesticks and putting it into what is known as ‘open space.’ When the Chikou Span enters open space, this means that there is nothing keeping price from moving swiftly and easily lower. This would more than likely create a new bear trend for not just Ethereum, but the entire cryptocurrency market as a whole.
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‘Ethereum killer’ community helping new use cases’ exploration: Ash Egan
Ash Egan, a Partner at venture capital firm Accomplice, recently featured on an edition of the ‘On The Brink with Castle Island’ podcast to discuss his view of the current crypto-asset investment landscape. In doing so, Egan highlighted ongoing innovations within the “Ethereum killer” community and how it “expands the sandbox” that allows exploration of new use cases for the crypto-ecosystem. He said,
“We are not going to invest in four Layer 1’s that have very similar approach.”
Moreover, the entrepreneur stated that while corporations such as Facebook and other non-financial organizations have taken charge of crypto-innovation, “the hope is that anyone can participate in crypto-networks.” With respect to mass adoption, Egan claimed that users need to be monetized, stressing on steps such as advertisements and referrals. As a result, in the liquidity layer, there is a higher possibility of developments around having a native asset tied to in-house tokens for providing more dividends or governance rights.
Towards the technical end of the conversation, Egan highlighted the use of smart contract wallets and their most efficient interest rates. In this regard, he claimed that similar technologies are being developed which may result in fewer use-cases making sense for each ecosystems.
Additionally, Egan stated that the general public has a different perception of cryptocurrency’s true definition. For a broader understanding of the ecosystem, he reiterated that “crypto-networks are democratizing access to digital and financial systems.”
Ethereum’s breach of descending broadening wedge could push it down to $166
With the Istanbul hardfork scheduled to happen in 17 days, the Ethereum community is keeping its eye on the blockchain’s native cryptocurrency, ETH. Valued at around $174 at the time of writing, Ether had a market cap of more than $19 billion, with almost $8.2 billion worth of ETH traded in the last 24 hours, according to CoinMarketCap. EXX exchange handled the most amount of ETH volume traded over the period, which accounted for 3.53% of the coin’s daily volume.
Ethereum 1-hour chart
Source: ETH/USD on TradingView
The 1-hour chart highlighted that ETH had entered a descending broadening wedge towards the start of last week, with the price shuttling between the two trend lines since. The formation of a descending broadening wedge usually does not create any specific trend with regards to volume. However, the volume is said to spike as the price approaches the trend lines for a breakout.
The 50MA could be seen dipping down below the price line, indicating bearish pressure on ETH for the short-term. Further, MACD, with the signal line having recently regained its place over the MACD line, also highlighted short-term downward movement in price.
With the EMA Ribbon lines diverging over the price in response to the mean reversion that took place a day before, it is quite likely that ETH will continue moving down the pattern for the next week or so. With the price currently preparing to test the lower trend line, a spike in volume could indicate a downward breakout in the short-term.
Assuming a downward breakout happens in the next few days, ETH could drop down to values near $166. However, this kind of pattern exhibits upward-facing breakouts in 72% of cases, suggesting that ETH will likely bounce off the lower trend line, continue through the pattern, before an eventual breakout upwards to above $190 in the coming weeks.
Ethereum price analysis: ETH/USD extends the decline below $180.00
- ETH bears engineered a strong sell-off below the critical support area.
- The downside momentum remains strong at this stage.
Ethereum, now the second-largest digital asset with the current market value of $19.3 billion, has recovered from the recent low of $174.62, though it is still 3.5% lower from this time on Monday. At the time of writing, ETH/USD is changing hands at $176.57.
Ethereum’s technical picture
On the daily charts, ETH/USD has moved below SMA50 (Simple Moving Average) at $180.90 and smashed psychological $180.00 and attempted a breakthrough below the lower line of the daily Bollinger Band at $177.23. The bulls lost the initiative and now the risks are skewed to the downside. If $174.00 gives way, the sell-off may be extended towards $160.00, which is the lower boundary of the recent long-term range.
On the upside, keep an eye on the above-said resistance area created by SMA50 daily. It is followed by SMA100 daily on approach to $181.00. We will need to see a sustainable move above this handle for the upside to gain traction.
ETH/USD, the daily chart
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