What is ETHUSDT?
For people new to crypto, this is a piece of the crypto market that you can buy and sell at different prices to make a profit. A futures contract is a promise to buy or sell something in the future. In this case, ETHUSDT is a futures contract for buying and selling Ethereum with USD.
ETHUSDT futures drop and recover from correction
A staggering two-week climb in ETHUSDT from July 21st to August 6th plateaued and showed signs of an impending overbought correction. Market tension was high and investors expected a dramatic correction.
As expected, the market saw a correction from the predicted support levels at 360, and now the price has returned to an intense upward movement. What can we expect from this emerging trend? Let’s take a look at an technical analysis.
Tension released from the upward swing
The large upward swing in the price of ETHUSDT from the last two weeks reflected a general upward trend in the cryptocurrency market as a whole. Bitcoin broke $10,000 in a dramatic fashion in late July, and investors had been eager to buy in and profit from the trend.
The trend leveled out, and ETHUSDT saw a brief bearish market correction before continuing upwards. The general outlook of this new trend is bullish, and some investors have already seen profits from buying at the correction.
High Stochastic and RSI levels
The Stochastic Oscillator level corresponds to the bottom third of the chart above, and it’s an indicator of an impending downward movement. The Stochastic level is a measure of the asset’s momentum and is used to identify price movements before they happen.
Stochastic Oscillator and Relative Strength Index levels dipped to 71 after hovering at around 80 since July 28th when the first leg of the trend saw a minor correction and continued to soar upwards. This brief bearish trend reflected a market correction in the overall bullish market for ETHUSDT.
Closing trend on the Moving Average Convergence Divergence
Similar to the measures of momentum, the Moving Average Convergence Divergence or MACD can be observed in the middle third of the chart above. This indicates the strength of trends in the market, and we can observe a large green hill where the crypto market saw a major boom in the last few weeks.
As the trend slowed down to 0, the blue MACD line above the histogram has approached the red signal line and converged. This convergence indicates a trend reversal, and a negative trend occurred for ETHUSDT.
Traders are more likely to sell off their long positions and open short positions when signs of negative trend reversals are imminent. Now that the correction has passed, traders who bought in at the 360 support levels are holding profitable positions.
How to capitalize on trends in ETHUSDT futures
Identifying cryptocurrency trends with technical analysis has been a very popular strategy in cryptocurrency futures markets. The safest moves are to identify undersold or undervalued assets and buy-in as they steadily climb upwards, but it is possible to short the market and make a profit from downward movements.
Buying is generally considered to be a safer investment. Each asset has a minimum price that can prevent further losses from increasing. Opening a market buy order on ETHUSDT futures through your crypto exchange of choice is the best way to capitalize on upward trends. However, like any investment, this is not without risk. This is only a useful technical analysis, it is not financial advice.
Similar examples in the price history of ETHUSDT and the crypto market, in general, can be found over the last few years. The major downward corrections of March 2020, July 2019, June 2019, early May 2018, and the infamous crashes following the record heights of January 2018. We have just witnessed the largest and fastest climb in the crypto market of 2020, and the market corrected itself to the established support level of 360 before recovering.
Market sense and technical analysis indicated that ETHUSDT was preparing for another major price movement. Common market sense told us that major upward swings are followed by downward market corrections, and the correction has since passed into another trend reversal.
The major upward swing is the two-week run that saw the Bitcoin price break $10,000 for the first time since February, and this has resulted in a flurry of activity in the markets and the press. We also saw reports of major Wall Street figures such as hedge fund manager Paul Tudor Jones investing in Bitcoin.
All of these factors have resulted in major price jumps across the board, but the major price jumps often come with major price corrections. Markets carry momentum, and institutional investors are more than eager to take profits after major upward swings. This means that even bullish markets must be tempered by bearish corrections, and cryptocurrency is no exception. Now that we’ve seen the market correction, the market momentum has reversed yet again back into the bullish market.