The weekly chart for ETH is looking good to me. Price reacted well to the FIB level and it’s holding above, forming a nice volume shelf. I would be keen to see this level hold, breaking below has a few decent stopping points but they make me a little less happy.
I would be overjoyed to see price move above the red neck line of the pattern and confirm it as support. The actual measured move price target for this pattern would be around $14,000. Coincidentally that lines up with the purple (Prior Trend) and orange lines ( Golden FIB).
Now, I cant say we reach that price with 100% certainty, but its definitely an area I’m watching. The B-XTrender is lining up well for a possible reversal flip. There is some danger here that the shadow continues to move to the downside, which would likely see this pattern invalidated. Historically when this happened previously, there were large sell offs.
If price does move higher, I’d be cautious around the RSI level hitting 70 for further weakness in the price action or at least a pause.
Based on the B-Xtrender pattern I’m hoping to see, it makes sense to look at prior instances in a bit more detail. It’s a small sample and really, I’m just showing you what I’m looking for, so you can understand my reactions in either scenarios.
What am I looking at specifically?
Lets talk about the set up.
The red bars fade and shrink, then a little green arrow appears. Bonus points, the ”shadow” around the back reverts to the zero line. These are the bits I really like so I’ll save all the technical mumbo jumbo. The good thing is, when we see this initial set up, it generally doesn’t take long to let us know which direction it will resolve in.
Bullish
A bullish resolution sees the shadow turn green and start moving up alongside the emergence of green bars. The larger the bars, the stronger the signal.
Here’s an example, of what I would love to see. This a a successful set up.
Bearish
A bearish resolution sees the shadow stay red and move below the zero line. The bars will remain red and increase in size.
There can be some weak green bars so don’t buy without confirmation.
Here’s an example, of what I would hate to see. This a a failed set up.
Looking at the bigger picture
I marked on the chart the four times since the start of 2022 where this signal appears with a black line.
Line 1: Failed – The bars did not pick up enough volume to deliver a strong enough buy signal. Price did have a small bounce but resumed with a sharp sell off. -64% to the FIB line.
Line 2: Successful – The bars did pick up volume and the shadow accelerating above the zero line. Price moved aggressively to the upside +146% to prior resistance.
Line 3: Successful – The bars and shadow again worked in favour of a bullish move. Price didn’t move as high but it did respect prior levels. +50% to prior resistance.
Line 4: This is where we are at today. The shadow is at the zero line, we have a green arrow and now we are waiting.
Conclusion
What have we learned from all this?
Confluence.
On their own, these signals mean nothing, but combined with other signals and patterns we can tilt the scales in our favour. I dare say, if this pattern does resolve in a bullish direction, a move to the red line would be likely. A fail of this pattern, and price probably heads back down to the $1,650 area.
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@jodyslaney with CISI Lvl 3 Wealth & Investment Management
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The views expressed above are my personal opinion and do not constitute investment or financial advice. Please remember that your capital is at risk, and past performance is not a reliable indicator of future results.