ETHOS: Consolidating Before a Breakout?
Impulsive vs. Corrective Price Action
The price patterns for many trading instruments tend to alternate between impulsive and corrective moves. Chris Capre wrote a great, free article on impulsive and corrective action that you can find here where he makes two key assertions about the relationship between both price patterns:
- Impulsive moves about 75% of the time are followed by corrective moves. These corrective moves can either be horizontal, slightly against the impulsive move, or even slightly in the same direction, but they denote a change in the order flow and participation.
- 75% of the time, these corrective moves are followed by impulsive moves in the same direction as the original impulsive move.
Price action, therefore, generally alternates between impulsive and corrective behavior.
ETHOS: Technical Overview
Ethos (listed under BQX on Binance) is displaying the type of impulsive/corrective price action noted above and may be transitioning into another impulsive move over the next several weeks:
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Consider the 4 phases noted in the Ethos chart above:
- Phase 1: between October and November price consolidated between support @ 10000 Satoshi and resistance @ 20000-25000 Satoshi
- Phase 2: price spiked through resistance @ 25000 Satoshi before impulsively moving higher to test 65000-70000 Satoshi
- Phase 3: price has been consolidating in a horizontal, counter-trend move since early 2018. Prices have repeated a pattern of making lower highs and lower lows
- Phase 4: based on the repetitive pattern of I-C-I-C moves – will the next phase be an impulsive move?
A Change in Price Structure
Focusing on the consolidation structure in phase 3 – notice the potential change in price structure. Prices have been making a succession of lower highs and lower lows (note cycles 1-4 below). However, cycle 5 did not bring another expected lower low if prices hold. Rather, price found support at the level where it previously met resistance during the Phase 1 consolidation. Since support generally becomes resistance upon a breach (and vice versa) it makes sense that price would find traction here.
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The change in price structure suggests that phase 3 (consolidation) may be ending. The next move would then be an impulsive move higher (based on I-C-I theory). If so, look for Ethos to break out of its consolidation structure shortly, potentially targeting 65000-70000 Satoshi again.
Buying in on a pullback towards 30000 Satoshi with a stop below the Role Reveral Level @ 21500 Satoshi and a target near the alltime highs at 65000 Satoshi would yield a reward:risk ratio of about 4:1 (reward: ~35000 Satoshi, risk: ~8500 Satoshi).
Fundamental Analysis
There are also several fundamental drivers that may actuate price appreciation over the next several weeks:
- The release of their highly anticipated Universal Wallet was planned for the end of March (Q1), but has been delayed due to internal reviews of the product. The team, however, has been extremely transparent in communicating its development progress. According to a recent post by Ethos Founder and CEO Shingo Lavine, the app is ready for beta launch with a global rollout expected this month. If so, this release could spur prices higher.
- Community Airdrop Event: as part of pre-registration, Ethos is lining up partners to airdrop tokens to the first Ethos Universal Wallet. Thus far partnerships have been announced with FollowCoin, SmartCash, aXpire, BitDegree, Bodhi, and FlashCoin among others. Additional partners will likely be announced shortly. To qualify for the airdrop, one need only pre-register for the wallet at the bottom of Ethos’s website.
Resources
- Ethos website
- Follow Ethos on Medium - they post plenty of interesting content here related to the project and cryptocurrency content in general
- 2nd Skies Forex - for more information on Price Action Trading
- Chris Capre's article on Impulsive/Corrective Price Action
NOTE: the data in this article is based off the data for BQX/BTC provided to TradingView from Binance
Legal Disclaimer: This blog post only represents my opinion. I am not a financial advisor and the content of this article is not presented as financial advice. Use the provided information and opinions at your own risk. This post, along with any other post on this blog, should be used for the purposes of information, education or entertainment. It should not be considered financial or investment advice of any kind. Although the information provided is accurate and true to the best of my knowledge, there may be omissions, errors or mistakes.