Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 3.74% and -3.46% , respectively. The estimated daily return in both directions based on their probability of occurrence is 1.95% and -1.66% . Yesterday’s return was -3.17% , which is below the first standard deviation. Our scoring is currently very negative (-3 ) for the month-on-month change and -2 for price indexation. Both scorings range from -3 up to 3 , which means that we estimate a very negative declining phase of the cycle. The development of the estimated cycles based on our analytical system is shown in the following chart.
Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. As we can see in the chart below, all ETH/USD MAs currently support bearish sentiment. In the case of growth, the annual MA may be the price resistance.
Since the creation of the last historical maximum, we have witnessed more declining trends, with the maximum level reaching 4 consecutive days, which is also the maximum in the measured period. The upward trends in recent weeks have not exceeded more than 3 days. The maximum for the last 3 years is 8 days. We could use the average long-term ATR (Average True Range) obtained from daily data (7.65% ) to estimate Stop Loss orders for our positions. The current value is 4.45% , which is below average. Approximately 90% confidence interval (return between -7.70% and 8.80% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (13.50% ) to estimate Profit Targets, as shown in the chart below.
After a dynamic decline in early December, basic technical analysis still supports short-term bearish sentiment as the market price creates lower low and lower highs. ETH/USD is currently very close to the psychological level of 3 000 and the level of Fibonacci retracement 38.20% . The price is also below short-term and long-term MAs. Recently entered the demand zone (green rectangle), where is also the level of Fibonacci retracement 50.00% at the bottom. However, we can clearly see a bullish divergence between price development and the RSI. Therefore, we can expect a small stabilization in the zone before any dynamic movement.