$ETH On The Edge: Short Trade With Major Confluence
2024-10-01

Trade Thesis:

Ethereum (ETHUSDT) is flashing several bearish signals that suggest a potential significant downside move. With Bitcoin ( CRYPTOCAP:BTC ) in a short-term downtrend, ETH appears poised to follow suit. Here's why this setup could be a high-probability short opportunity.

Technical Analysis:

Strong Overhead Resistance at $2700:

Key Resistance Level: ETH rejected off the $2700 area, a significant resistance area that's previously halted upward movements.

High Volume Node (HVN): This level coincides with a High Volume Node, indicating heavy trading activity and potential selling pressure above this price.

Price Crossed Below VWAP and HMAs:

VWAP Break: ETH has dipped below the VWAP, signaling a shift toward bearish momentum.
30 & 60 Hull Moving Averages (HMAs): Trading beneath the 30 and 60 HMAs adds to the bearish outlook.

Bitcoin's Downtrend Influence:

BTC Correlation: Bitcoin's decline sets a negative tone for the crypto market, increasing the likelihood of ETH moving downward.

Market Sentiment: A bearish BTC often leads to selling pressure across major altcoins like Ethereum.

Potential Support Levels:

Minor Support at $2500: Watch for temporary support around $2500.
Major Support at $2350: A significant support zone with another HVN lies near $2350, which could be the target area for this short.

Attractive Risk-to-Reward Ratio:

Stop Loss Options: Place a stop loss at $2700 (conservative) or $2750 (aggressive), based on your risk appetite.
Take Profit Target: Aim for the $2400 area, offering a 1:1.5 or 1:2 risk-to-reward ratio, depending on stop placement.

Trade Setup:

🔹 Entry Point: Consider entering a short position below $2600 (below the strongest HVN area)
🔹 Stop Loss: Set at $2700 or $2750.
🔹 Take Profit: Target $2400 or $2350.
Key Indicators to Watch:

VWAP and HMAs: Sustained trading below these may confirm the downtrend.
Volume Trends: Increasing sell volume can strengthen the bearish case.
Bitcoin's Movement: BTC's price action will likely influence ETH.
Conclusion:

ETH is teetering on the edge, with multiple technical factors pointing toward a potential pullback. The convergence of strong overhead resistance, bearish moving average crossovers, and Bitcoin's downtrend creates a compelling short setup. Trading is about probabilities, and these aligned signals boost the confidence in this trade idea.

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