ETH at Support... but has Ichimoku Problem

ETHUSD has sold off from the recent high down to a critical support at 2406. This support is the 50% Retracement of the Year to Date bullish thrust and also matches with the Ichimoku Kijun Sen. The Support level is also held up by the prior highs of the December 2023 consolidation range.

When analyzing this chart to make an opinion if the Support may hold I found elements of Ichimoku yielded a highly probable answer. So while this post is an analysis I would like to educate readers on an important technique when using Ichimoku.

Ichimoku is best used with Multi-Timeframe Analysis. The way the indicator is drawn, using 50% Retracements, lends itself well to finding matching levels and patterns across related timeframes. Often times when a symbol is at the Kijun Sen (the 26 period line) on a higher timeframe it will match with the Kumo Cloud on the lower timeframe. The lower timeframes I found that work best for the Daily are the 4 Hour (for most things that trade 24 hours) and 2 Hour (for stocks). This allows there to be sufficient number of bars on a lower timeframe that will combine together to a fractal level up on the higher timeframe.

After looking at the higher timeframe (Daily) let's now drill down to the lower 4 Hour timeframe for our answer:

Down on the 4 Hour we see that price has breached the cloud and momentum (the purple line/lagging span/Chikou) has also crossed to the bearish side of the cloud. This means that on the lower timeframe price has confirmed a trend change from neutral (when it was inside the cloud) to bearish.

What this tells us is that while we have identified a Support on the Daily the lower timeframe is telling us that it has been breached and no longer likely to hold.

As a bonus trick to learn when using Ichimoku one can look at the direction of the Tenkan Sen and project its future location. In order for a trend to reverse the Tenkan Sen and Kijun Sen must align in a bullish or bearish configuration. (Red < Green = Bearish, Red > Green = Bullish). Presently on the Daily the TS/KS configuration is still bullish but the Tenkan Sen "turned" a few bars prior. It is now heading down to potentially cross the Kijun Sen to become bearish.

So we have a lower timeframe trend change on the lower timeframe and a subtle hint on the primary timeframe that this Support which price is currently holding may in fact fail. Time will tell and I'll be watching this closely to see if it provides a good teachable moment.

TL;DR: ETHUSD at critical 2378 Support but lower timeframe suggests it will break lower.