Ethereum (ETH) started the week in green and rallied hard until it ran into a key trend line resistance. This resistance will be very hard to breach as the price has failed to break past it since the beginning of the year. If ETH/USD falls from current levels towards the bottom of the ascending channel, we could see it break below the channel to decline further. Ethereum (ETH) is already heavily overbought against both the US Dollar (USD) and Bitcoin (BTC) but if it breaks past this resistance, we can see it rally past $300 in no time. There is a lot of bullish interest in the market and a lot of retail traders are still sold on the idea that the bear market is over and that the new bull run has already begun.
It is very tempting to believe that when the price rallies in such a parabolic manner for weeks without any significant pullback in sight. Ethereum (ETH) also broke past key resistance levels and has now also received a green light from the SEC as it is now considered a consumable currency. This came to light during the Kik case and is very helpful to the entire cryptocurrency space because most altcoins are or were based on the Ethereum (ETH) blockchain at some point. The way last week closed has brought short term fear into the market as the Fear and Greed Index is hovering around 46. However, today’s close will be critical in determining Ethereum (ETH)’s definitive direction for the next few weeks. We could see some sideways movement for a while but ETH/USD now has to break past the trend line resistance or face rejection and fall back towards the bottom of the ascending channel.
Ethereum (ETH) appears to be out of room to rally against both the US Dollar (USD) and Bitcoin (BTC) but we could see a fake out as we have in the past. The 4H chart for ETH/BTC shows that the stage is set for such a breakout. We could see the bull flag on the 4H chart result in ETH/BTC breaking to the upside short term only to see it followed by a strong correction later on. This is a highly probable outcome because such moves around key turning points often allow market makers to perform a liquidity hunt, shake out the fickle traders and then do what is supposed to happen in the first place.
The price of Ethereum (ETH) remains heavily overbought against both the US Dollar (USD) and Bitcoin (BTC) which is why a strong correction in the long run is inevitable. In fact, we think the price has yet to go down further before it finds its true bottom. However, until that begins to happen, the price still has plenty of room to rally short term especially in a pump and dump manner. The manipulation that we saw during the past few weeks might come into play again if the price manages to break past these key resistance levels.