Ethereum Analysis - Top Down Approach

Given the current pullback in the crypto space, I thought I would post a quick top down analysis for Ethereum.

You will see form the charts below that I use an Ichimoku indicator for my analysis. I find this indicator works well across all asset classes and use it as the basis for my decision making.

A top down approach looks at charts for different timeframes to tell the full picture. I start with the weekly chart and work through the daily, 4 hour and then 60 min chart.

Through mentoring by experienced traders, it has been drilled into me that you always trade in the direction of then higher timeframe. In this case, for Ethereum to be about to tank you would need to see support on the weekly chart fail. Until this is resolved entering positions is speculation and not trading.

My analysis is as follows:

Weekly Chart

https://www.tradingview.com/x/kM6duZ06/

The bullish run on the weekly chart looks to be losing momentum. Price is above the cloud which is bullish but recent trading has seen support breached at $215 level. Importantly, the weekly bar needs to close below this level for it to signal a bearish reversal. This is something I’m watching closely as its looking likely.

Daily Chart

https://www.tradingview.com/x/bQ2SKYF3/

No surprises that ETH is trading below the cloud and this is bearish. Having said this, the Kijun Sen (Green Line)is providing support which is encouraging. It’s not a signal to get long, but if this level holds then I would expect a bounce towards $215- $216 level. I think a big bounce is a low probability event at the moment.

4 Hour Chart

https://www.tradingview.com/x/ZUCMvZ51/

Looks nasty as expected with price trading below the cloud. When ETH traded down to $185 there was an exhaustion signal but recent improvement has nullified this signal. My expectation is that this low is retested given the downward trend in place. When this occurs I would be encouraged by a quick snap back as this may signal a spike low.

60 Minute Chart

https://www.tradingview.com/x/hd89nYRl/

Nothing positive here either with price below the cloud and the downward trend firmly in place. I would like to see price trade above the cloud on the 60 mins before entertaining going long. This would need some consolidation for the next 24 hours at a minimum.

Summary
Anyone saying that there is support for ETH at current levels is banking on the fact that price regains $215 by the end of this week. If that occurs, the recent falls will just be a pullback in the uptrend. This is something that is healthy and essentially re-loads momentum for a push higher. To me, it is too early to buy with any confidence. Lower timeframes look nasty and I would need price to trade above the cloud on a 60min chart before entering any longs.

I hope this helps and I'm a little disappointed I couldn’t be more bullish!