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Another Elon Musk tweet, another bloodbath in the crypto markets. What started as a promising day was almost certainly just more manipulation to build longs and liquidate shorts before dropping price. Fear remains the dominant emotion in the market and that's always going to be a worrying sign.
Ethereum printed two disturbing patters on the daily chart, let's take a look:
I am detecting an inclining wedge developing off of the mid-May crash which forms the flag pole of a potential bear flag. Additionally, the W that confirmed yesterday turned into an M on the Musk tweet. A closer look:
Note the declining volume on the right-side of the potential bear flag. The flagpole represents a 50% drop in price. Should Ethereum print a matching flagpole, it would send price back to ~$1000. In the near-term, based on the M forming within the wedge and potential breakdown out of the wedge, I would look for a test of 200 EMA on the 1D before a freefall. The 200EMA is coming up to meet price ~$2k. Failure here could be a breakdown on the longer-term bull market we've all been enjoying. Also, worth watching is the MACD and any uptick in volume.
Drilling down to the 1H chart, we observe that the pattern is forming across both the 50 and 200 EMAs, which would typically signify that a significant technical pattern is forming on the charts.
In order to retain the bull market, we want to see Ethereum bounce at $2500 and hold price there or above. A breakout from the zone would put price in a position to challenge $3k again. Failure at $3k is becoming less and less of an option for Ethereum. Watch for a breakdown to the 200-day EMA around $2k. Further breakdown from that point would send price spiraling. Proceed with caution.
