Ethereum: Confirming a bear market with high probability
Introduction
Those familiar with my system won't find anything new here, just a simple reiteration of the same system I have used to call bear markets or local highs several times with a lot of sucess. This system helps us confirm a all time high and a top after a massive uptrend and it has many confirming components with each one by themselves should make a case for a change of bias, but all together make a very strong case for long term bullish or bearishness. The linked charts will show where and how I was using this system to call for caution on BTC on the 3d chart at 50k to confirming the bear market on the 1 week and 1 month timeframes.
Analysis
Top Chart
Lower Charts
The On Balance volume is a great indicator for determining what is going on with the total volume situation and helps measure the tension between buyers and sellers. It is a bit harder to use divergences with crypto as the process keeps adding new supply but crosses can be very important, especially if you have an exchange where you can somewhat trust volume data. As you can see the OBV has slipped the 10 EMA and is now leaning heavily upon the 20. Very shortly I expect the prediction on the chart and it proceeds in an exceedingly bearish manner.
A bearish MACD cross on the weekly timeframe after an all time high by itself is a major warning sign of either major consolidation incoming or a trend reversal. When that is combined with a bearish VSTOP or price action below the 20W SMA it gets even more bearish.
Watchlist
In order to fully confirm a bear market according to this system we are missing two related conditions
In order to change the bias to bullish we would need to see
Going up a time frame to the 2 week chart we can see that the VSTOP has already flipped bearish, the MACD appears to be approaching a cross, and the OBV is about to slip the 10 EMA. In my mind with my familiarity with this system this would be a good place to take profit or prepare for reversal (bear market)
Closing Thoughts
I am short an alt coin that looks particularly bad to me right now and that is my only crypto position open right now. I am not a financial advisor or a CMT but I am a guy that spend a lot of time trying to make my own system to remove my bias in determining trend to help me trend trade. And I am bearish.
Those familiar with my system won't find anything new here, just a simple reiteration of the same system I have used to call bear markets or local highs several times with a lot of sucess. This system helps us confirm a all time high and a top after a massive uptrend and it has many confirming components with each one by themselves should make a case for a change of bias, but all together make a very strong case for long term bullish or bearishness. The linked charts will show where and how I was using this system to call for caution on BTC on the 3d chart at 50k to confirming the bear market on the 1 week and 1 month timeframes.
Analysis
Top Chart
- the 20 Week SMA is the baseline of the bollinger band and used in many moving average systems. ETH has slipped the 20 ween SMA, closed a whole candle body below, and is now testing it as resistance. The 2018 top had a much more violent slip below the 20 week and then price action tested the 20 week for around a month before continuing the downtrend. Currently ETH seems to have approached the cliff and slipped off, grabbing the 20W SMA like it were tuffs of grass. Prediction: That hold will slip in due time with new local lows.
- Volatility Stop. A great indicator to help you determine the trend and place stops. It can also help you visualize dynamic support and resistance. This has been poised bearishly since mid-may and that was a major warning sign for those familiar with the system.
- Volatility Stop Multiple Time Frame . I have set this to 3x, so this basically shows the 3 week volatility stop . Combined with default Vstop it helps confirm super-bearish or bullish trends. When the VSTOP is broken the red arrow appears and we wait for confirmation and we have been on that condition for weeks now
Lower Charts
The On Balance volume is a great indicator for determining what is going on with the total volume situation and helps measure the tension between buyers and sellers. It is a bit harder to use divergences with crypto as the process keeps adding new supply but crosses can be very important, especially if you have an exchange where you can somewhat trust volume data. As you can see the OBV has slipped the 10 EMA and is now leaning heavily upon the 20. Very shortly I expect the prediction on the chart and it proceeds in an exceedingly bearish manner.
A bearish MACD cross on the weekly timeframe after an all time high by itself is a major warning sign of either major consolidation incoming or a trend reversal. When that is combined with a bearish VSTOP or price action below the 20W SMA it gets even more bearish.
Watchlist
In order to fully confirm a bear market according to this system we are missing two related conditions
- OBV below the 20 EMA
- The 10 and 20 OBV EMAs cross bearish
In order to change the bias to bullish we would need to see
- OBV above the 10 EMA
- Bullish MACD cross
- VStop to flip bullish
- MTF VSTOP to flip Bullish with confirmation
- Whole Candle Bodies above the 20 W SMA, preferably with a retest
Going up a time frame to the 2 week chart we can see that the VSTOP has already flipped bearish, the MACD appears to be approaching a cross, and the OBV is about to slip the 10 EMA. In my mind with my familiarity with this system this would be a good place to take profit or prepare for reversal (bear market)
Closing Thoughts
I am short an alt coin that looks particularly bad to me right now and that is my only crypto position open right now. I am not a financial advisor or a CMT but I am a guy that spend a lot of time trying to make my own system to remove my bias in determining trend to help me trend trade. And I am bearish.
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