ETH/USDT (Long) - successful Merge not yet priced in; short-term

13 Sep 2022

Fundamentals:

• Many people assume the Merge will be a buy-the-rumour-sell-the-news event. I was also of that opinion, but it is no longer my base case
  
• I believe people still see a lot of risks arising from the upgrade, hence its success is not yet reflected in the price of ETH
  
• This trade is a bet on a (short-term) wave of optimism which will set in once developers announce the success of the upgrade. This analysis is only for short-term (1-2 weeks), not for a long-horizon investment allocation (even though that wouldn't be a bad idea either)
  
• Beware of the inflation number coming out today at 8:30 ET. The number must be below expectations to give us the green light with this trade. Otherwise, the expectations of further rate hikes will knock the price back down
  

Technicals:

• I have been closely watching how the ETH evolves solely based on price action, without the use of any indicators
  
• The important part was to break above the $1700 level (black line) and hold it. Ethereum has done this part perfectly, setting up a solid base just above that level, as you can see on the 4-hour chart, giving us also a terrific risk/reward ratio
  

Trade:

• There are two ways to enter the trade (i) either go long right now or (ii) after the release of the CPI report; depending on your risk preference
  
• I would use the red line as a stop loss, Ethereum has been forming that level for the past three days, so it should be fairly strong
  
• If you use the green line for profit-taking, that gives you a lovely risk/reward ratioof around 6:1. However, you are more than welcome to set up your own risk management framework
  

Happy Trading!
Dollero Exchange

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