Currently down some 88% off it’s all time high, ETH is trading around $164. Since December 2018 lows, price action has consolidated into an ascending triangle, with price currently trading above the triangle. Which is typically bullish. Formations such as ascending triangles tend to retest for a pre-flight check.
But what’s currently peaking our interest is ETH/BTC, the Ethereum Bitcoin pair. As historically it’s acted as a hedge, especially after bullish bitcoin gusts, as Bitcoin was pulling back after climbing to relatively new highs.
The above chart highlights 3 periods where ETH/BTC took a parabolic climb, during a BTC consolidation period after a bullish gust. We suspect a similar market cycle is around the corner.
January 4th 2017, through January 14th, BTC/USD lost 28% in USD value, as Ethereum gained 28% over that exact time period.
March 5th through the 24th of 2017, BTC/USD lost some %30 in value while ETH/BTC gained a substantial %305 during that exact time period.
December 16th of 2017 through February 6th of 2018, as Bitcoin lost 64% in USD value, Ethereum climbed %189 in BTC value.
The inverse correlation doesn’t always play out, but we’ve witnessed several of these market cycles unfold and traded them in the past. We’ve also seen extended eras of direct correlation, such has the latter quarters of 2018, yet much of 2018’s market dynamics were dictated by a bear market, unlike today’s case as we highlighted in our previous publication, calling for an imminent upwards BTC move.
Fundamental Speculation: *disclaimer, this section is purely speculative*
Much media focus has been on the lack of a Bitcoin ETF, thus no talks of Ethereum futures have made headlines since ErisX’s letter to the SEC in February of 2019, and rumors of a CBOE Ethereum futures listing back in December of 2018.
CBOE is working on retiring their Bitcoin futures, we highly doubt they will be listing ETH futures as they’ve lost the cryptocurrency futures battle to CME. Hence our news scrapers are geared up for a CME listing of ETH futures in Q3 or Q4 of 2019.
We could potentially see an Ethereum surge before the news breaks as ETH/USD’s current pennant formation suggests something is in the works for the cryptocurrency.
The Trade Setup:
At Coin Observatory we’re technical traders, this is how we’re gearing up for this upcoming ETH/BTC cycle:
As ETH/USD is in stalling after a bullish pennant breakout, ETH/BTC is currently in a symmetrical triangle, nearing triangle support.
Fibonacci levels of the previous bullish impulse move have price action finding support above the 61.8 retracement level. Which is the ideal pullback and otherwise referred to as the golden ration.
Our buy ladders are in this zone, raging from 0.032482 to 0.03124btc.
Our stop is pending, as volatility tends to be high during periods of pre-surge.
Tentative the symmetrical triangle holds, our long position is still valid. A break below the the symmetrical triangle will invalidate the trade.
Our trading community is gearing up to take advantage of this setup utilising leveraged positions, more of our detailed and up-to-date insight can be found on our Discord Server.
We’re not insinuating that it’s time to hedge BTC via ETH or ETH futures, yet the ETH/USD chart looks prime of an ascending triangle re-test, and ETH/BTC is at support. The symmetrical pennant on ETH/BTC is quite large and can take some months to apex.
Join our discord ranks, and tell us your opinion.
Thus far this year, our Medium publications have had a 100% accuracy, highlighting 2 bitcoin rallies, and ADA/BTC’s incoming rally and targets.
We aim to maintain our publication accuracy, and are fairly optimistic about this one.
Author: George Saber
Disclaimer: Trading and investing in cryptocurrency is very risky. The above is not financial advice, trading advice, nor any other type of advice. We’re simply relaying our findings, and how we plan on gearing up for a possible opportunity.