ETH: Compression not seen since the beginning of the year

Technical analysis very often advises traders how to move in the stock market. Sometimes these are lines, sometimes analyses of advanced indicators, and sometimes simple moving averages.

A moving average (MA) smooths out price data to help identify trends more clearly. An exponential moving average (EMA) gives more weight to recent prices, making it more responsive to market changes.

What does this mean for Ethereum?

ETH compressions since 2024.

Let’s start with the explanation. The yellow line represents the 100-period exponential moving average (EMA100, also known as the long line), and the red line represents the 20-period exponential moving average (EMA20, also known as the short line). When the short line crosses the long one from above, it most often heralds price declines; otherwise, it might herald price increases.

BUY/SELL ETH

The rectangles show how the price compresses between the two exponential averages. Thus, the yellow rectangles indicate situations where compression occurred when the short line was above the long one. The orange rectangle shows situations of compression in the opposite situation.

Historically, whenever EMA20 > EMA100, we first had declines below EMA100, and only then a breakout.

In the case when EMA20 < EMA100, we had a breakout above EMA100.

Currently, EMA20 > EMA100, which was also represented by the yellow rectangles. Will the price behave differently this time than historically?

No one can provide a definitive answer to this, and it is essential to remember that past events are no guarantee of future outcomes.

DYOR!