Ethereum (ETH) Could Make A Run For $200 Before The Sell-Off Begins

Ethereum (ETH) Could Make A Run For $200 Before The Sell-Off Begins

Ethereum (ETH) has a strong bearish divergence on the daily chart but it would not be surprising to see this invalidated in light of recent market movements. The price is still likely to make a run for $200 short term. Traders have become overly optimistic once again as the price has found a trend line support that has provided the pedestal it needed to maintain its rally. So far, there is no sign of a loss of bullish momentum. The price could rally towards $200 and end up hitting the rising wedge. This will most likely be the final move to the upside before the next sell-off. Volume continues to decline and as the daily chart for ETH/USD shows, the price is poised for a big move anytime now.

As ETH/USD is trading within a rising wedge that has a strong trend line resistance, the price is unlikely to break past it especially under current conditions. Ethereum (ETH) remains heavily overbought on the daily time as well as the weekly time frames. There is no reason to believe that the price could keep on surging in this manner because it never does. Now, one might argue that we have seen similar price action around the previous bull run. Well, the price action was similar but there are stark differences. If we are to believe that the current market cycle is based on the 2014-15 cycle, then we have to accept that we are a long way from the next bull run yet. So, if that is the case, we cannot expect the price to keep on surging in this manner. Regardless of which stage of the previous cycle we are at, ETH/USD is long overdue for a major decline.

Ethereum Shorts are in decline after the recent rally as the bears are losing control short term. It would appear that most retail bears were too eager to short the price as they are most of the time. ETHUSDShorts has found support at the 21 day EMA and could fall further if this level does not hold up. We are yet to see further decline in the price of Ethereum (ETH) but that does not mean that it cannot rally short term. In fact that would be the most probable scenario as the bears would need a catalyst to give up.

One such catalyst could be prolonged sideways movement with desperate buyers getting in. The shorts to longs ratio is still too high for the bears to do anything of consequence just yet. The price will most likely trade sideways in the weeks and months ahead with slight rallies followed by minor pullbacks. The big picture is expected to remain intact and ETH/USD is very unlikely to break past the rising wedge resistance. On the other hand, a few big moves to the downside would accelerate Ethereum (ETH)’s fall below the rising wedge but this does not seem to be the game plan. The whales intend to prolong this bear market as this market cycle has to be longer than the previous one.  

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