Ethereum (ETH) plunged deep in the red last week as the market took a turn for the downside. We saw it break below the key 61.8% fib extension level at $144. The price is currently trading above that level and is eyeing further upside. It would not be surprising to see ETH/USD trading above $163 in the weeks ahead. This short term bullishness must however not be mistaken with the end of this correction that started when ETH/USD entered a bear trend in July this year. Ethereum (ETH) like the rest of the market has been in a bear market since the beginning of 2018. We saw a bullish period in between but the second half of the bear market has yet to come to completion.
RSI on the 4H chart for ETH/USD shows that the price is now in a good position to continue to trade higher for a while. The vast majority of retail traders is extremely fearful and expects further downside. There is also a strong probability that we might see a move towards the 200 EMA on the 4H time frame. A fake out past the descending channel can also not be ruled out at this point. The market makers and whales could play all sorts of games short term to convince traders that this is the end of the correction and we are headed towards a new yearly high. While I do think a short term relief rally is long overdue, I remain bearish long term on the market and I expect ETH/USD to plunge well below $80 at the end of this phase of the bear market.
The 4H chart for Ethereum dominance (ETH.D) presents a very clear picture of what to expect. If we see a break and close above the 38.2% fib extension level, that would be a point where I would be short term bullish on Ethereum (ETH) and other altcoins. It is important to keep this simple. One thing I would like to add is that hodling can be extremely risky during a bear market. If you intend to trade any bullish moves at this time then it is important to practice effective risk management.
There is an old saying in the market and that…