Published: February 25th, 2020
The price action of Ethereum, the world’s second cryptocurrency recently mirrored that of Bitcoin. The volatility of the benchmark crypto has spilled over to the larger cryptocurrency market pushing most major coins to develop bear-favoring sentiments. Though the price of Ethereum has dropped to levels that are substantially lower than the highs recently witnessed in the markets, the submissive selloff the market saw on Thursday could result in a further upside, a position that may leave Ethereum bears heaving when the uptrend peaks.
Last week when the fortunes of Bitcoin changed and the currency surged past the $10,000 mark, the price action of Ethereum changed as well. At the peak of trading, the world’s second crypto attained a yearly high of $286.27. The price has since dropped to $273.24 (Sunday, February 23, 10:14 UTC) with a two-week low of $250.95 recorded on Thursday, February 20 (8:30 UTC).
Despite the momentary downturn in the price towards the end of last week, market analysts think that ETH will soon invalidate the bullish market structure it recently formed. The same school of thought postulates that the coin may record monumental surges after the slide.
According to a cross-section of these cryptocurrency market analysts, Ethereum price action may develop a momentum that will leave the bears sweating.
On Wednesday, February 19, ETH experienced an intense selloff that ended with the coin dropping from this year’s high of $286 down to $250. It found strong support in this region and has since climbed back to the $260s region.
The currency is showing signs, though minimal for now, of successfully going over this price range. The stagnation could imply that the $260 to $275 region is the near-term area of resistance. It could also signal the efforts of the bulls that are collecting resources to send the coin on another rally.
Since the price action of Ethereum of late has an extreme correlation with Bitcoin, the next substantial change in the price action of the coin depends a lot on those of Bitcoin. If the world’s first crypto assumes an upward trend in the next few days, then Ethereum might do the same.
These sentiments are echoed by Alex Krüger, a renowned cryptocurrency economist. Krüger argues that the coin’s bullish reactions around the key support levels may have a bad effect on the bears that choose to remain out of action.
Sharing his sentiments via a tweet, Krüger said that late Ethereum buyers may sweat when the next rally peaks.
He advised traders to keep an eye on the buying spots as indicated by the daily charts. Krüger declared SMAs of $200 with a peak of $290. Though the peak is the best adding/buying spot, Krüger was quick to dissuade buyers from trading around the peak. Instead, traders should buy around when the coin enters the $260 to $280 region.
Krüger defended his wisdom by saying that buying at the peak demands skillful executions and tight stops that many traders have not mustered.
As the markets brace for a new week, Ethereum will have to go over the $290-mark for the potential bullish sentiment to kick in again. This position is backed by many Ethereum price analysts.
Krüger, for instance, singled out $285 as the best adding or buying spot. The coin is already gaining momentum towards the uptrend kick off point. One top analyst who tweets under the handle @RookieXBT says that the Ethereum outlook is tending towards bullish. He backed Krüger’s proposition adding that three technical factors that will take the coin to $290.
According to RookieXBT, Ethereum is busy on the six-hour cryptocurrency chart printing signs that indicate that it is almost jumping past the top formation it formed three weeks ago. The said formation lies slightly below the $290-mark.
First, the coin has assumed an ascending triangle structure characterized by moves that appear to test the coin’s horizontal resistance level. Price action with an ascending triangle is an indication that an upward break in imminent.
Second, Ethereum’s Relative Resistance Index (RSI) placed on a six-hour timeline, develops a falling wedge formation. RSI measures the intensity of the price action, and when it goes into a falling wedge formation, chances are that the asset in question will break upwards.
Lastly, the almost invisible bullish convergences witnessed between the price of Ethereum and Bitcoin is telling. Bitcoin has registered a set of higher lows against an RSI that tends towards lower lows. Such a phenomenon indicates that the RSI wedge may not take long before breaking.
Aside from these indicators, the price action of Ethereum recently crossed and confirmed a closing position that is well above the Ichimoku Cloud. This result is in line with the prediction that the price of Ethereum is likely to develop a bull run.
Bitcoin managed a similar feat back in 2016. The coin then managed a rally that got it to a record high of $19,891. While this precedent is not a confirmation of any kind, it goes to show that Ethereum can do well in 2020.
Besides, the Moving Average Convergence Divergence (MACD) of the coin recently switched from a bear to a bull. The last time such transformation occurred was two years ago in October 2017.
MACD is the momentum indicator that financial markets use to track the trends of assets. It is very good news for Ethereum bulls now that the indicator has suggested that a rally is likely to happen.
Ethereum is still strong in the $260 price range. With most price analysts foreseeing the asset going over and possibly breaching the $300-mark, this probably is the best time to buy. All indications point to the coin surging. Bulls, as such, can almost smell a field day. You cannot quite say the same about Ethereum bears.