Few altcoins have performed better in 2020 than Ethereum. The second-ranked cryptocurrency is up well over 200% on the year, and from the Black Thursday bottom to the 2020 high, Ethereum rose over 400%.
Momentum looks to be behind bulls, however, an ominous signal just triggered on ETHUSD weekly price charts. The signal could be warning that a top is in, and Etheruem could soon lead the altcoin market off a cliff.
Ethereum Rallies 400% From Black Thursday Bottom, But Weekly Sell Signal Points To End Of Uptrend
The crypto market has had one of the best starts to the year since 2017 when all-time high prices were reached. Since then, cryptocurrencies fell into a bear market that has yet to officially end by setting a new high.
Ethereum, for example, remains down almost 70% from its former peak price, even despite such bullish price action in 2020. The top-ranked altcoin was among the best investments to make with stimulus checks issued back in April. Those who did would have doubled their money and then some.
But the recent rally, a full six months from the last peak, may soon be coming to an end.
The TD Sequential indicator created by Thomas Demark to time market tops and bottoms is signaling a sell set up on ETHUSD weekly charts. If the indicator is as accurate as it has been in the past on weekly timeframes, the crypto market has a major crash ahead.
ETHUSD Weekly TD Sequential 9 Sell Setup | Source: TradingView
TD 9 Triggers on ETHUSD Weekly, Corresponding Dollar Signal Flashes
The TD Sequential indicator has been extremely reliable throughout the history of Ethereum. It also nearly perfectly called several Bitcoin tops and bottoms.
The last 9 sell setup on weekly timeframes took place in July 2019. Prior to that, was January during the first full week of January 2018. Both of these tops resulted in a downtrend following each signal.
Making matters worse for Ethereum, is the fact that the asset it trades against – the dollar – is about to stage a powerful reversal, according to the same TD 9 signal.
Ethereum and all cryptocurrencies primarily trade against two assets: USD and BTC. The DXY Dollar Currency Index is a batch of other top currencies weighted against the dollar.
Just like altcoins often respond to BTC dominance due to the asset’s size, the greater financial market is often dictated by the ebb and flow of the dollar due to the global reserve currency status.
DXY Ethereum Weekly Inverse Correlation Chart Comparison | Source: TradingView
The above chart shows a strong inverse correlation between Ethereum and the DXY. As Ethereum topped, the DXY rebounded into a new uptrend. Could the dollar’s strength been responsible for the crypto winter all along?
And with the same signal triggered again, what does this mean for Ethereum and the rest of the altcoin market? Will Bitcoin, stocks, gold, and other markets also see an impact much like Black Thursday? The days ahead will be telling if the signal ends up confirming.
It is worth noting, however, that a 9 sell setup is “perfected” with a new high. This could imply that Ethereum has another pump left in its tank before the reversal happens. Or perhaps no reversal ever arrives, and the signal fails to confirm.