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I think that there will be a time to build up a significant position, allowing for a longer-term move based upon the next cycle.
- Ethereum markets initially rallied a bit Friday but gave back gains as we continue to see a lot of noisy behavior.
- This is a market that I think has a lot of noise to chew through, not the least of which is going to be the fact that there is a severe lack of risk appetite.
- As long as that’s going to be the case, it’s difficult to imagine how this market takes off anytime soon.
- Ethereum is pretty far out there on the risk spectrum, and it does make a certain amount of sense that we would see hesitation to get involved in this type of environment.
Is There Enough Momentum?
When I look at the last week or so, it’s easy to see that we haven’t got much in the way of momentum, after that massive breakout. That being said, the market is likely to continue seeing a lot of noisy behavior, especially as we question whether or not the US dollar is going to continue to fall in value, or if this has simply been a bit of a short-term pullback?
Given enough time, we may test the $1800 level, but $1800 is the beginning of pretty significant resistance that extends to the $2000 level. Because of this, the market is likely going to struggle to get above there, so that just ends up being an even better place to start shorting from. Underneath, we have the 50-day EMA which is just above the $1200 level, which could set up for a nice target.
If we break down below the 50-day EMA, it’s likely that we continue to see a lot of downward pressure, perhaps sending this market down to the $1000 level. I don’t know that it will be easy, but it’s possible that we could see that happen. At that point, then Ethereum will more likely than not completely unwind. Keep an eye on It going, because it also has a major influence on what happens in crypto overall.
I have no interest in buying Ethereum, at least not yet, but I think that there will be a time to build up a significant position, allowing for a longer-term move based upon the next cycle. At this point, I think it’s probably only a matter of time before we enter a major accumulation phase, but I don’t think we are there yet.
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