Hello and welcome to another video for Diary of a trader. We’re going to go over how to identify the conditions that can be met for a market bottom or how to identify if there’s going to be a low melt. And for the purposes of this video we’ll be looking at the current chart of the Ethereum. Now it is 6:00 so 9:00 a.m. Central time and it is the 14th of June in 2018. And as we’re looking at the chart here we can see this is the hourly let’s look at the daily and this is in crypto currencies. This is this is a theory and the theory is the second most valuable and second most arguably the second most important crypto currencies after Bitcoin. And we can see though that over the last eight days or so that we have had any significant decrease in the price action. Now The question comes to well if something is falling or rising at such a large rate, how do you determine whether that is going to continue or whether it’s going to end and. You know what we’re looking at here is this market geometry. This is a game that this tool is called a Gand box, but it’s it can be used to construct a series and the number of game squares like to have Gahn square of 90. That’s what this one represents. And so. We look at their square of 144 rather. So if we look at the chart here we can see that price whenever it falls through one of these angles. The ones that travel from the top two from the bottom to the top we can see that we’ve seen a falling and then an acceleration in movement of price. However, when we approached this angle here. We stop, we actually found a lot of support and we want to know why was there a lot of support bought and how do we identify that support well. If we look at, for instance the entire price activity we fix here.
If we look at the level that we’re at we like to look at some other other conditions from the past that would help us analyze why this may have been a stopping point. So this this line here this thin blue line is the 786 Fibonacci retracement and that’s from this. The most recent swing low in spring high on the on the first of May down here all the way up to our sorry the first of April all the way to the 6th of May. All right. And so that’s for that Fibonacci was drawn and so the area that we stopped at yesterday the price level is right on that 7 8 6 retracement and that is shared by the fear level that it starts from the initial swing low of the breakout of Ethereum to the all time high. So that is the same zone we’re finding in there and actually as we’re looking at the volume profile here on the right.
Another reason why we may have found a bottom is that this is a high volume node that we’re at. We’re trading with a significant amount of volume in the volume profile right. This is actually the second largest volume node zone after what has been traded down here which was which accounts for the very beginning of a theory that was a major accumulation phase. And so that’s where we’re sitting right now at that 480. But if we bring it down to the hour.
On a shorter timeframe like the hourly what do we see we see large volume bars. Coming in that are actually buying volume. So this is a clear sign that we have participants coming in to buy up at these lower prices and certainly to support. Price from moving lower. We have an inverse Head and Shoulders set up here that’s a strong reversal pattern. We could draw that just like this. All right in. Head and shoulders pattern and we have what you would probably call a ball flag right here where it’s so that the projected idea is that as we approach this angle here. We will respond to it as a support zone and we should move higher. All right. But another indication that we have reached this bottom is all these multiple time frames, so let’s look at the daily. On the daily. We have the following conditions. The composite index is in it is in a low. All right, we’re actually we’re actually in a very natural supported zone where we often see prices bounce. If we scroll all the way out. And so we’re at a natural, low zone Ethereum and the fact that we are below both of the averages here indicates that we are in a buying condition. So the minute we start to slope up. Means that we are in a buying condition of 4 below these two moving averages.
Also look at the stochastic RSI. What value is set. We are all the way down into oversold territory and if we look here we see that the fast moving stochastic is as sloping up which indicates that we will be moving higher. So we have all of that going for us. Then, if we look at the weekly. What do we have. Well, we finally are below the moving averages in the weekly and we’re approaching a zone that may or may not be a supported zone with the in the composite index. But if we do start to if we delay still do start to move higher the fact that we’re below these moving averages a supporter of buying. If we look at the stochastic our size while we are in neutral territory still pointing down, but we are still indicating that we have conditions for moving higher. When you look at the weekly charts. And we’ve been in an overall long term Bhole trend, then things that are that are around the 50 percent. Love the 50 value area of the stochastic are sheer in any fast moving oscillator those can turn into support zones for buying. So we are still within that value area.
And then if we look at the monthly finally. We can see that we have very supportive buying conditions of the monthly. And this actually will look a little silly because if you think about it Ethereum is not all it is not new compared to if we look at a 4 x pair or regular equity market or the S&P 500 ETF. We don’t have a lot of history to go by on the monthly but the values are still here so when they finally meet the conditions for being painted out and isolate we can see that that we have a we have a low in the composite index being met followed by a higher low but we have a lower loan price so this is in effect an actual divergence on the monthly chart.
Followed by the conditions that we have extended oversold conditions in the monthly chart. Now any monthly chart that has extended oversold or overbought conditions, it does not stay there very long. It does not stay in here. It responds very violently and very reactively out so we should expect to see a large, responsive price move higher to get out of the zone based on the monthly and so if we just look at all of these conditions where we have a a bit of a downturn going forward since the beginning of the year we look at the current price action where it was halted on this angle. In addition to the shared we have two equal Fibonacci value areas in a shorter and a longer term swing range and in addition to the extended conditions in these oscillators on the daily, weekly and monthly charts we have a very high probability that this is a market bottom. And in addition to the high volume node that we see here at the current value area.
All right. And so this will be fun to look at as we as you as you see this video. If we were to look at it again in about six months closer to December or January of 2019 it’ll be interesting to see if this scenario where we have these these conditions being met for a bottoming in price. Where we could see prices move higher from this from this area and this could certainly be a market bottom. Thank you for watching this video. Look forward to talking with you in our next video bye.
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