Source: PaxForex Premium Analytics Portal, Fundamental Insight
Ethereum recorded a new all-time high as Bitcoin retreated from its peak close to 42,000. Many cryptocurrency traders seek alternatives to Bitcoin, which is in a bubble comparable to 2017, after more than doubling its previous all-time high shy of 20,000. As more capital chases returns, the Bitcoin trade becomes overly crowded, and traders seek alternative opportunities. While the long-term outlook features a bullish bias, traders should prepare for a short-term sell-off, as Ethereum remains extremely overbought.
Some capital is rotating out of Bitcoin and into alternatives, with Ethereum the primary source. Smart money that wants to book Bitcoin profits after the massive advance but keep funds within the cryptocurrency sector will continue to diversify. Unless Bitcoin collapses below 30,000, which could take the sector down with it, traders can consider sell-offs in Ethereum as long-term buying opportunities. A retreat in the ETH/USD to below 1,000 is possible after the second-largest cryptocurrency by market-value rallied sharply over the past three months by more than 1,000 or over 300%.
The forecast for the ETH/USD turned bearish in the short-term as momentum collapses. The Kijun-sen and Tenkan-sen entered a sideways trend. Adding to signs for a temporary pullback is the Senkou Span B of the Ichimoku Kinko Hyo Cloud, which flatlined, as well. The CCI is retreating from its peak in extreme overbought territory, and a breakdown below 100 could trigger a brief sell-off in this cryptocurrency pair. Will bears pressure the ETH/USD into its next horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the ETH/USD remain inside the or breakdown below the 1,312.70 to 1,438.40 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,355.00
- Take Profit Zone: 888.90 – 992.20
- Stop Loss Level: 1,500.00
Should price action for the ETH/USD breakout above 1,438.40 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,500.00
- Take Profit Zone: 1,650.00 – 1,760.00
- Stop Loss Level: 1,438.40
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
