Ethereum approaching significant resistance
The Ethereum markets have rallied over the last couple of weeks while nobody was paying attention against the US dollar. We are currently hovering around the $150 level, an area that has been resistance more than once. This is an area that has rejected price a couple of times, but what is most notable here is that the market has made a “lower low.”
As goes Bitcoin, so goes the rest
While the cryptocurrency world likes the idea of currencies being independent, the reality is that they all tend to move in a block. Bitcoin has shown a bit of bullishness as of late and is also pressing significant resistance at the $4000 level. That translates over in Ethereum at the $150 handle. We had recently broken above a downtrend line in the Bitcoin market, just as you can make an argument for doing so here in Ethereum. Simply put, Bitcoin needs to break above the 4200 level for Ethereum to build up enough momentum to continue going higher.
You could make a bit of an argument for a “W pattern” in this chart, with a little bit higher low than the previous one. You could also stretch things out and possibly talk about an ascending triangle. Regardless, both are very bullish and that of course gives Ethereum buyers something to hang their hat on. Obviously, this is a very bullish set up but at the same time there is a simple malaise when it comes to cryptocurrencies. The idea of this market exploding to the upside and making people rich overnight again is far-fetched to say the least. Those days are long over.
However, if we turn around and break below the $125 level, it’s very likely that the market rolls over back to the $100 handle again. That obviously would be very bullish and it could send this market even lower than that given enough time. At this point, it looks more or less like cryptocurrencies are trying to form some type of base for a longer-term escalation in price, but obviously we need some type of catalyst in the markets to make these things happen. Quite frankly, there just is no reason for markets to go higher other than simple speculation and trading.
The MACD moving average is just crossed above the signal line a couple of days ago during the surge higher on slightly elevated volume, and that in and of itself is a bullish sign as it shows momentum picking up. Ultimately, there are plenty of positive signs in this market but we may need to grind away at the resistance before finally breaking out. The last couple of candlesticks have been somewhat positive in the sense that we are simply hanging around these elevated levels and not pulling back from them.
The take away
As for buying Ethereum, you need a few things to give you a hand here. You need momentum to come back in the market, something that will be seen against Bitcoin first. If we can break above $4200 in the BTC/USD pair, then you have a chance of seeing Ethereum rally significantly. Another thing that you may need to see is the US dollar falling in strength, as it could give you a bit of a boost in this two-way trade.
As things stand right now, and before the break out, this is probably a “buy on the dips” type of market down to the $100 level. That being said, it’s very unlikely that the move is explosive, and I do see a significant amount of resistance above at the $200 handle which would be the next major target for those bullish of this market. If we were to break down below the $100 level, then I think Ethereum trades closer to $75.