More downside to come?

More downside to come?

After a tremendous run in 2017 and a parabolic rise in many coins at the start of 2018 we have the first major correction of the year. 

We had a nice bounce in the market over the last couple days from that initial correction, but that does not necessarily means we are in the clear just yet.

What to watch out for (using ether as parameter for the overall market):
The bounce back to $1160, became strong resistance. technically, it is a 61.8% retracement of correction, a hurdle that we need to overcome to resume the bullish trend without further downside correction. While is tempting to try to catch the coin at the lows, I would wait for that hurdle to be cleared before jumping back in with confidence unless we go thru a complete correction as explained below.

Technical Corrections normally occur in 3 waves. The initial correction, a bounce, and a secondary correction. It seems that we have gone thru the first two phases when we crashed to $760 and rebounded to $1,160, but I am still waiting for the second corrective wave.

If the second corrective wave is of the same magnitude as the first (measured from the $1160 level) we would expect to see a correction down to around $625. That level would bring the full correction to a 61,8% retracement of the 2017 and 2018 run up and would be a very strong technical place to buy.

On the way there, I expected that we will other large swing and have strong support again at the $760 level. The chart shows that we are currently bouncing between the 23.6% and 38.2%retracement levels which is technically sound. and a break below $906 will continue to indicate downside.

Off course, as I mentioned at the start of this post, a break above the black line at $1,160 invalidates the downside analysis and would indicate a continuation of the uptrend back to the $1,450 highs.

Happy trading!

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