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ETH/USDT: Signs of Topping Out 1D (Aug. 08)

X Force Global Analysis:

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In this analysis, we take an unbiased stance on Ethereum's Tether pair (USDT), assessing its bullish and bearish probabilities on its daily chart.

Analysis

- To begin with, we can count Elliott Waves for the current uptrend leading up to its local top
- Counting Elliott Impulse Waves (!2345), we can see that the impulse waves have all already played out
- Considering that the degree of the trend is 70 degrees, a corrective wave count is highly probable, as such steepness in trend is unsustainable
- Based on fibonacci retracements, we could expect a corrective wave to take place down to the 0.382 Fibonacci support
- One thing to notice is that the 0.382 Fibonacci support converges with the Ichimoku cloud at a certain point
- This indicates that even a correction leading down to 340 USDT would still validate the overall bullish trend
- The envelope indicator demonstrates that prices are way overextended above the original trend, and is due for a correction
- Technical indicators all point to a similar direction
- The Relative Strength Index (RSI) is at overbought levels, having created lower highs and lower lows
- The Moving Average Convergence Divergence (MACD) shows decreasing bullish histograms with a potential death cross in play
- The Stochastic Oscillator has formed a death cross at overbought territories

What We Believe

While Ethereum may be looking to retest and form a lower high in the shorter term charts, technicals on the daily chart demonstrate strong signs of the altcoin being overbought, and overextended above a sustainable level of trend. As such, any insignificant breakouts we may see on the shorter time frames could be interpreted as an attempt by bears providing liquidity in the market, and seeking opportunities to maximize their positions at optimum levels.

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