Digital Currency Support Levels Hold Up; What Now?
Using Ethereum (ETH) as my specimen I watched prices gap lower and run directly into support, and in the case of ETH it was a simple math calculation establishing $166 per coin as a dependable level of support, and the sell off held this support level trading to $170 before reversing. I think it is important to ask what should happen now.
Let’s review the price action and examine the technical analysis logic we have been using. In 2017 ETH traded from $18 to $408 and sold off more than 50% trading down to $170, if you do the math $170 was about a 62% retracement which is standard in technical analysis.
The real fear started when the ETH coin traded through the $200 level, this shook up investors who chased the runaway coin when it spiked to the highs in June. Prices exploded in late May trading from $138 per coin to $408, and it did this in frenzied fashion gapping higher nearly every day, and along the way it garnered much media attention, every Uber driver knew Bitcoin was going higher, but when they learned about the other currencies they learned they could get on the train for $300, so they flocked to the lower priced digital currencies. I think the price tag of Bitcoin at $3000 was a clear speed bump opening the door for DC’s like Ethereum, Ripple and Ethereum Classic, these were and are all lower priced and calmed investors fear about ownership.
It is similar to hesitating when buying high-priced technology stocks like Amazon, Google or Priceline. The higher price tag steers investors to lower priced stocks so they can add them to portfolio, I think the same thing is happening in digital currencies and Ethereum Classic, Ripple and Moreno are beneficiaries.
But back to our Ethereum (ETH) support levels and what happens now. We expect ETH to trade to the top of the channel at $242 over the next week, where it will be important to determine if the coin can break out of the downtrend since the $408 high. We fully expect the $166 support level to hold and this coin to trade logically in the channel, and any closes above the $245 brings a retest of the $315 level. The cool thing about any digital currency is that they move like greased lightning, and they can prove out their direction in one day where other assets take month’s and years to complete. I think this is the attraction to digital currencies in general, investors love the action, and this is drawing more global players.
Ethereum held a critical support level and is trading perfectly in the channel. I caution you to stay away from over trading any digital currency and trade with the long term trend, investorswhich is up, this will help you avoid frustration and losses. Digital Currencies are not a flash in the pan trend, these are units of trade and barter which allows the coinvestors’ flexibility and not get locked into the pitfalls of fiat currency.
I know the boring advice of buy and hold is like my grandpa’s car, but when you have an emerging trend that makes sense in our changing technology world, it is best to have a game plan, and in the case of digital currencies they will be the way we pay for goods and services in the future, and everyone needs to own them. The days of fiat currency are numbered and digital currencies, in general, will do more than survive – they will become part of your everyday life as a global consumer. Long live Satoshi Nakamoto.
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