Weekly Analysis – Ether – Is It A Good Buy Now?

Big Picture

Since the start of May, when major cryptocurrencies began their slide, most of the attention has been on Bitcoin (the king of cryptocurrency) and Ether (the king of alt-coins). The price of Ether has crashed by 60% from its high in mid-May 2021!

Hence, it is natural that many traders will be looking at a speculative opportunity of “buying cheap”. And the million dollar question remains – Is this a dead cat bounce, or a rally in disguise? Lets see…

Bitcoin vs Alt-coins

On this chart, you can see that I am comparing the performance of Ether & Bitcoin.Dominance (BTC.D). Why?

In the crypto world where Bitcoin is the “king”, we are looking at 2 camps of money flow. 1 is into Bitcoin itself, while the other is into other alternate coins (or alt-coins) such as Ether etc. With the BTC.D falling aimlessly, it was a clear sign that it’s the season for alt-coins coins, even with the brief rally.

The almost perfect reverse correlation between these 2 makes BTC.D a worthy monitor in the world of cryptocurrencies.

Here the seemingly continuation in the fall of the BTC.D seems to suggest more upside to Ether (ETH) itself. But is the current price an attractive buy? Let’s find out.

Technically Speaking…

For ETHUSD, the momentum oscillators are in their oversold territory across 3 of my favorite momentum oscillators. A divergence can be seen across the oscillators which signify that a reversal may be round the corner.

Here is what might happen technically…

In the bullish scenario, ETHUSD will climb higher and head towards the next resistance around the $3100 zone. With a fresh reversal of trend, an ideal area of scaling in will be around the $2500 zone.
In the bearish scenario, ETHUSD continues to slide downwards towards the support zone of $1800 zone. An ideal area to go short would be at the $3100 zone.

Conclusion

The current structure of the price supports a downside more than the “HODL” upside right now. We might be looking at a reactionary bounce right now with long term believers jumping in without thinking too much.

The safer choice would be to wait for the dead cat bounce to the key level mentioned (if true) and for the price to exhaust itself, before shorting it. However, if you are looking to take a brief trade in between, you should do so with the reference to the key levels that was mentioned above.