Ethereum (ETH) rallied like a raging bull to the surprise of many yesterday. This from a cryptocurrency that had seen red days one after another and exhibited extreme weakness was completely out of the blue. The price seems to have bottomed out around $172 and those waiting for $150 might have missed the train already. The chart above for ETH/USD
shows that the previous resistance at $200 has now turned into a strong support. This support was tested today but it held strongly and the price bounced off it towards the 21 Day EMA. There was a lack of bullish momentum to push the price above the 21 Day EMA. Fear of further downside over the weekend encouraged some investor to take profit and the price has now formed a doji, which will most likely be followed by similar candles over the weekend. However, if all goes well in the crypto market, the price of Ethereum (ETH) is expected to break past $250 next week.
RSI for ETH/USD on the daily time frame is recovering from oversold levels. There is plenty of room for further upside and the price can easily rally past $250. VWMACD analysis for the above chart also shows that the sentiment has turned bullish for the first time since the beginning of this month and is likely to remain bullish for the foreseeable future. If the price rallies from current levels, it will still have to break past the 200 Day EMA resistance which will not be easy. However, as we have seen in the past, most technical studies do not hold during periods of FOMO or FUD in the market. So, if Ethereum (ETH) continues on the same trajectory as before, it will reach a new high in a few weeks of beginning a new trend. The previous bullish cycle has shown us exactly how cryptocurrencies like Ethereum (ETH) have surged 20% or higher just in a single day! That kind of growth does not leave much room for technical analysis which is why during those times, most traders go back to investing and hodl till the altcoin season lasts.
Everything looks good as far as the big picture is concerned, but short term investors should still remain cautious as the technical indicators are well lined up for a fall back to the support line at $172. The 4H chart above for ETH/USD
shows that Ethereum (ETH) has just broken the short term support at $212.18 which has now turned into resistance. If the price fails to break past it, it will have to test the 21EMA on the 4H chart. RSI for the above chart also looks prepared for a fall towards the bottom again. The same is true of the slow stochastic indicator which shows that the price of Ethereum (ETH) has topped out on the 4H time frame and should retrace at least to the 21 EMA on the 4H time frame over the weekend before continuing higher.