Has Ethereum hammered out a bottom?

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency. Please read the full London CryptoCurrency Show disclaimer HERE

In recent weeks Ethereum has been on what seems like a relentless slide. It's hard to comprehend that only two months ago the price was trading two and a half times higher. However, during this sell off it was noticeable that the daily volumes remained fairly light suggesting two things. Firstly investors seemed to be, I wouldn't say happy but, prepared to hold onto their coins for the long term. The second thing to note is that this suggested we had not reached a level of perceived good value, or bargain territory. If we go back to the last very high volume day, which was the beginning of the rally back on the 11th of December last year, we can see that this began at the $518 level. So this is where we were looking for investors to wake up again. This is exactly what we have seen over the weekend, and despite spiking down to a low of $ 450, we actually closed all the way back up at $ 538 leaving us with a hammer candlestick.

Ethereum daily chart and a closeup of yesterday's hammer.

There are many reversal signals in candlestick charting and a hammer is one of those. What Chartists look for is a small bodied candle (the coloured part which is the difference between the open and the close) that appears at, or near the top of the days range. This is the head of the hammer! They also look for a long lower wick (the thin line showing how low we traded that day). This forms the handle and it is said that the market is hammering out the bottom of the bear move. As with many candlestick formations confirmation is required to increase the potency of the signal. Traders say "To do this we would now need to see a green candle with a closing price above $575. Even so, the pick up in volume, coupled with the Relative Strength being in oversold territory, suggests there is good reason for hope in this market"

Techs for Techs

The interest in the crypto markets by the old school of traders is increasing by the day. We are hearing about tried and tested systems beginning to be employed, such as cross exchange arbitrage opportunities, or the spread differential between Bitcoin and Ethereum. But the biggest explosion of interest at the moment is from Chartists, or Technical analysts, or techs as they like to be called.

With most of the ICO's coming to market being from the tech industry, one wonders who has the biggest claim to the abbreviation, technology specialists or technical analysts?

Regardless of who wins they both have their place but there is much talk amongst the Chartists at the moment about a key support level in Ethereum, so here's a brief explanation of what is being said.

The support comes in at $518 in US dollar terms and relates to the first breakout rally back on December 11th. On that particular day the market closed at $518. The following day the market opened at that exact same price and began a spectacular rally. Those few days also saw the biggest volumes we have seen in this market and they have not yet been matched, even in the recent panic selling. Ethereum is putting up a defence at current levels, just above $600, but needs to do more to calm the nerves.

One thing is for sure, one could expect plenty of activity should we take a look at this 518 level, but I suspect there will be plenty of buyers waiting in the wings before hand.

Has Ethereum hammered out a bottom?

Techs for Techs

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