Excerpt from the "Crypto BullBear Markets Update for July 27, 2016"Ether (ETH)Ether is currently painting a rather murky picture from a technical perspective, particularly since the hard fork drama began. Despite a tag of our previous ST ProTrade buy area between 17 - 18 yesterday we refrained from entering the trade due to mixed signals on the charts, as well as due to fundamental uncertainty surrounding ETC. For now we want to remain neutral while price remains in this technical congestion area, although generally speaking we still maintain over bearish bias over the medium term.
Getting to the daily chart below, we can see that price is now caught in an expanding downward wedge created by a broken downtrend line and a new overhead trendline, telling us that the market remains indecisive. This is reinforced by SCMR which is now printing neutral candles, as well as dynamic support and resistance which is nonexistent other than a small support area around 16. Also notice that price is resting right on the 200-day SMA right now, as well as the shorter term EMA's, so a break back below 18 could spell trouble for the bulls over the near term.
Moving on to momentum and volume, we can see that Willy, RSI, and PPO have move above the centerline but are already running into resistance telling us that perhaps the current courtertrend bounce is running out of steam. Additionally, strong sell volumes, a wavering A/D line, and the fact that price failed to break above volume profile PoC are all indications that perhaps there are still more sellers than buyers at these levels for the time being.
Despite the mixed to slightly bearish short to medium term technicals, would do not want to be buyers in the 17 - 18 range anymore. Having said that, a new OTE long zone, SCMR support, and trendline support are all sitting between 15 - 16 so perhaps this is the more attractive zone to try to scalp a relatively quick long on another countertrend bounce. Until we get there, however, we remain on the sidelines.
Ether Classic (ETC)What a day it was for ETC yesterday! A 300% rally on massive volume created quite a buzz around the crypto community in a very short amount of time, although now some of the air seems to be leaking from the balloon. That said, from a fundamental standpoint we remain firmly bullish on ETC as compared to ETH, which is why we are looking to reload on the long side during this correction. Following the price action we saw yesterday, this is to be expected prior to another move to the upside.
We move our timeframe out slightly today to look at the 30min chart for some clues about where we head next. We can see that price broke down through what was a fairly bullish pennant pattern forming around the 0.0030 level, a breakdown which precipitated the move much lower we are seeing today. However, price is already finding additional support at the longer term trendline, OTE long zone, and older pivot area that has turned into a demand zone. Not only that, but a volume profile notch sits right around the 0.002 level with a nice looking area above it so we might get spikes down here a few times before a bottom comes in.
As far as volume and momentum go, trading volumes have been weighted to the sellside over the past few hours, however they a have been anemic compared to what we saw on the buyside yesterday. Not only that, but the A/D line is holding up surprisingly well during the recent dumps which tells us there are still some buyers of this coin around current levels. Finally, momentum is looking bullish as well considering Willy is now tagging oversold territory, RSI is bouncing off of oversold territory, and MACD is putting in a nice bullish divergence.
While we think the bias remains to the upside in ETC from both a fundamental and technical perspective, we also think there could be a final washout deeper into the OTE zone between 17 - 20. This would run stops of the late longs and weak hands, and would allow the market makers to access liquidity down below the now key 20 level. We would like to take a shot on the long side around current levels, but will add in that 18 - 20 range if we get there (BBA is not scalping this market quite yet, so we will be adding on dips).
One final note on ETC trading over the near term: we are still working off of a 30 minute chart so the normal timeframes for the ProTrades need to be adjusted down temporarily until we get more historical price data. The short and medium term setups could be considered scalps for now, while the long term trade is the one looking out a few weeks.
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