Trading Analysis: ETH/USD 6/6/17

I wanted to provide some context before I talked about a specific setup today. On the bottom right you can see the weekly chart and the simple moving averages. On the bottom left is the daily chart. You can see we’ve become extremely stretched technically. We’re hearing stories about folks in China using BTC and ETC to get money out of the country and I also got a question on Quora about where you can buy $1000 ETH call options. So the excitement is definitely in the market right now.

The setup

With that in mind check out the top two charts from today. On the right is the 60 minute chart and I’ve circled the spike up in price (volume also spiked) and then the reversal of that move later on. You can see it zoomed in on the 5 minute chart. We obviously got some piece of news that spiked us up (couldn’t find out what that was) and that made me very skeptical given how mature the trend was that traders would be able to buy that news this late and not get tested. By waiting for the first failed high right around 268 we got an aggressive move back down into the area where the news came out, which isn’t surprising. Often the market will go down and take out the lows from before the news but that didn’t happen today. For tomorrow this 248–250 area would be my first area to watch to determine if we get a steeper move down. I won’t be taking off any longs until that area is violated. Using extreme price spikes like this deep into a trend can provide a valuable area to determine your exit or trade targets (if you can short).