ETH/USD: Ethereum Breakout Analysis

10 нояб. 2020 г.

In this post, I'll be exploring Ethereum's chart on the USD pair. I will cover key areas of support and resistance, as well as signs of bullishness that indicate a potential breakout.

Daily Chart Analysis
- To begin with, we can start with the daily chart on the left hand side
- Major support levels are marked by blue, minor support levels by green, and major resistance levels marked by red
- We can see a U shape recovery on ETH's daily chart, as prices have created higher lows and higher highs recently
- There is huge resistance between $460 and $470, where we have seen a rejection take place several times already
- There is extremely strong resistance at the 0.786 fibonacci retracement level.
- While the Relative Strength Index (RSI) has cooled off from overbought levels
- The Moving Average Convergence Divergence (MACD) shows decreasing bullish momentum as the bullish histograms grow smaller
- We could see a potential death cross form on the MACD soon, but given the past performance of this indicator on the daily, its significance is questionable

4 Hour Chart Analysis
- We can spot a clear uptrend on the 4 hour chart
- Prices have consolidated in a bull flag pattern before breaking out to new local highs
- Between $430 and $460, it's currently trading within a triangle pattern, and this could be interpreted as a bullish pattern based on elliott waves
- After one last correction to $440 levels completing the E wave, we could possibly see prices push further by breaking out
- The RSI also demonstrates a hidden bullish divergence with prices forming higher lows, and the RSI forming lower lows
- The MACD also demonstrates a divergence with its moving averages, and demonstrates potential for a golden cross

Fundamentals
- There is hype behind this coin's fundamentals regarding Ethereum 2.0
- Ethereum 2.0 is an update to move from a Proof of Work method to a Proof of Stake validation
- However, just as their Constantinople upgrade, it's very likely that this update could not be finalized within this year

Conclusion
Charts on both the daily and the 4 hour demonstrate signs of strength and bullishness. Nevertheless, investors shouldn't be too euphoric as there is a probability that the fundamental event that is currently driving this bullish rally, could not go as planned.