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ETH Rally Terminated with Gravestone Doji Candlestick Pattern
Key Highlights:
- Gravestone Doji Indicates Potential Reversal: The appearance of a Gravestone Doji candlestick pattern suggests a possible bearish reversal for ETH, signaling traders to be cautious.
- Strong Support Levels Identified: Ethereum finds robust support at the 50-period DEMA ($2500) and the 100-period EMA ($2394), which are key levels to watch for potential bullish momentum.
- Bullish and Bearish Scenarios Outlined: The analysis presents two scenarios - a bullish outlook with Ethereum continuing its uptrend within the ascending channel, and a bearish outlook suggesting a potential reversal if the Gravestone Doji pattern is confirmed by subsequent price action.
Technical Market Outlook:
The ETH/USD pair has made a local high at the level of $2,537 and pulled back lower after the Gravestone Doji candlestick pattern was made on the H4 time frame chart. The bulls broke above the supply zone, so the levels of $2,390, $2,445, and $2,473 will now act as the technical supports. The H4 time frame momentum is strong and positive, which supports the short-term bullish outlook for ETH.
Technical Insights:
Candlestick Pattern: There is a 'Gravestone Doji' candlestick at the top of the recent price range, typically considered a bearish reversal pattern.
Moving Averages: Ethereum is trading above both the 50-period Double Exponential Moving Average (DEMA) and the 100-period Exponential Moving Average (EMA), indicating a bullish trend in the medium term.
DEMA and EMA: The DEMA is at approximately $2500, and the EMA is around $2394, suggesting immediate support levels that could bolster the price if it retraces.
Trendlines: Ethereum is within an ascending channel, showing a consistent upward trend over the selected period. This channel defines potential support and resistance levels within the trend.
Relative Strength Index (RSI): The RSI is slightly above the midpoint at 53.41, indicating slight bullish momentum without being overbought.
The Intraday 1H Indicator Signals:
- 21 out of 23 technical indicators are showing a Sell signal, 2 showing a Buy signal.
- 14 out of 18 moving averages are showing a Sell signal, 4 are showing a Buy signal.
Sentiment Scoreboard: The general sentiment on the scoreboard is very bullish (75% vs. 25% bears). Last week, bullish sentiment increased even more (78% bulls vs. 22% bears) together with the last three days sentiment (81% bulls vs. 19% bears).
Weekly Pivot Point Analysis:
Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.
- WR3 ($2,586): This is the third resistance level above the weekly pivot and represents a strong ceiling that, if surpassed, could indicate a very strong bullish trend for the week.
- WR2 ($2,542): The second resistance level is closer to the current price and may act as the first significant barrier to upward movement.
- WR1 ($2,519): The first resistance level is just above the current market price, suggesting that the price is at a critical juncture where it could either face resistance or break through to higher levels.
- Weekly Pivot ($2,499): The pivot level itself often serves as a neutral point around which price may oscillate. It can act as either support or resistance depending on the price action relative to this level.
- WS1 ($2,476): The first level of support beneath the weekly pivot which could provide a bounce-back if the price retraces from the current levels.
- WS2 ($2,455): The second support level further down which could come into play if there is a significant pullback.
- WS3 ($2,412): The third and strongest level of support within this range; if prices reach this level, it could be an area where buyers step in strongly, provided the bearish momentum is not overwhelming.
ETH Bullish Scenario:
Continuation of Uptrend: If Ethereum maintains its trajectory within the ascending channel and stays above both moving averages, the bullish trend could continue. Breaching the upper boundary of the channel may lead to testing new resistance levels or making new highs.
Support at Moving Averages: Should the price retrace, the DEMA and EMA can serve as key support levels. Holding above these could reaffirm buyer confidence and push the price back up.
- If ETH maintains its position above the weekly pivot ($2,499) and breaches WR1 ($2,519), this could signify a strengthening of the current uptrend.
- A continued bullish movement could see ETH challenging the WR2 ($2,542) and potentially the WR3 ($2,586) if the momentum is strong, perhaps driven by positive market sentiment or news.
ETH Bearish Scenario:
Reversal Pattern Confirmation: If the 'Gravestone Doji' is followed by a downturn, it could signify the start of a bearish reversal. A break below the lower boundary of the ascending channel and the moving averages would strengthen this scenario.
RSI Divergence: If the price makes a new high but the RSI does not follow, this bearish divergence could indicate weakening momentum and potential for a downturn.
- A bearish reversal would be confirmed if ETH drops below the weekly pivot and further through WS1 ($2,476), which could see the support levels being tested in succession.
- A significant downturn could bring the price down to WS2 ($2,455) and possibly WS3 ($2,412) if negative sentiment or market events induce selling pressure.
Useful Links
Important Notice
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.