Ethereum (ETH) is likely to begin another uptrend against Bitcoin (BTC) short term as the price has just hit the bottom of a descending channel that also forms part of a bull flag. This formation has a real shot at breaking a long term downtrend against Bitcoin (BTC) short term to kick-off a mini altcoin season. While we do not expect it to last for long, we do see the price to be in a position where it has become easier to push for such a breakout. Even if the price fails to break the downtrend resistance, the upcoming move to the upside could still be very profitable and investors that are already in the market might consider trading some of their Bitcoin (BTC) for Ethereum (ETH) and other altcoins short term.
A lot of good traders agree that most altcoin pairs are just an opportunity to increase your holdings in Bitcoin (BTC) terms. The ETH/BTC pair is a good example of that and there are a lot of exchanges that allow traders to trade this pair without having to convert their Bitcoin (BTC) into Ethereum (ETH). It is important to note that Ethereum (ETH) remains overbought against Bitcoin (BTC) on higher time frames but there is still plenty of room to rally short term. The price could end up breaking past the long term trend line resistance even if it is a fake out or a trap to lure in more buyers so the whales could systemically dump on them. If anything, we have seen in the past few days that some big players are really eager to sell and they are not afraid to dump it all at certain points. There is no reason to think that this could not happen on a larger scale when the price nears levels of $300 or higher.
If we look at the daily chart for ETH/USD, we see an asset that has just tested the lower limit of the ascending channel and is now looking to climb higher towards a higher target. However, if we were to look at it like that without taking another more important view into account, this would be being blindly optimistic. This is because what we as traders and investors should be able to see is the price topping out. As we can see, ETH/USD could form a double top with long wicks to the upside.
It is very tempting to believe as a bull that the price could keep on going up this channel in perpetuity. However, history tells us that this is never the case. Sooner or later, we will see ETH/USD break below this channel to begin its long anticipated downtrend. When that happens, the decline might be a lot faster than we expect as the exchanges would not want to give shorts an opportunity to stack up. Unless you are a good trader, setting stop losses at such crucial points in this market often results in you ending up with no position. So, being bullish at this point could be very risky and we might see the price crash hard especially if it ends up running stops on the way down.
Source: Read Full Article