In case you hadn’t noticed, ETH-USD markets have been on a very strong bull run for the past week. In a matter of five days, ETH-USD managed to increase by $100 — nearly a 50 percent market value increase — with very little pullback or consolidation. After ETH-USD’s multi-week-long bear run from $420 to the $130s, ETH spent over a month consolidating and forming a very solid support level before ultimately launching into its most recent bull run. Let’s take a look at some support and resistance levels, and see where ETH is likely heading in the next few days.
Looking at the macro view of this trend, we can see significant levels of support and resistance that have proven time and time again to be especially relevant throughout the life of the market:
Figure 1: ETH-USD, 12-hr Candles, Bitfinex, Macro Trend
After consolidating between the 50 percent and 61 percent retracement values, ETH-USD managed to gather enough of a foundation to break out and climb in a very strong bull run. The trend was so strong, in fact, that throughout the run, it traced the upper Bollinger Bands for several days.
Zooming in a little closer to our current candles within this trend, we can see a couple signs of slight market exhaustion that could lead to some minor pullback or possible consolidation:
Figure 2: ETH-USD, 12-hr Candles, Bitfinex, Closer View of Current Trend
Although not a guarantee of market trend reversal, the doji candle is a sign of market uncertainty as the bearish and bullish traders attempt to gain dominance over the market. Essentially, dojis represent an opportunity for market reversal as the price movement becomes stalemated between buyers and sellers. Whether the market will actually reverse requires the confirmation of the next candle in the market. Currently, we are forming the confirmation candle to decide if we will actually reverse the 12-hour candle trend.
Zooming in even further, we can see very clear support and resistance lines not only on the macro Fibonacci Retracements shown above, but also on the Fibonacci Retracements for the current bullish breakout:
Figure 3: ETH-USD, 1-hr Candles, Bitfinex, View of Current Breakout
This breakout has managed to find support along all the major Fib lines. Currently, there is strong support between $275 (the macro 38 percent line) and $268 (the micro 50 percent line). Should a further retracement occur in this market, I would highly expect it to be short-lived and most likely rally off the 50 percent micro Fib line, ultimately making new ETH-USD highs in this bullish market. Currently, there are two things in this market that are catching my eye:
- During highly bullish markets, it is really common to retrace to the 38 percent line and bounce to a continuation of the bullish trend. Currently, we are in the process of bouncing off the 38 percent bullish trendline.
- If we zoom in to the 15-minute candles, we see a potential ascending wedge forming — a bearish continuation pattern.
Figure 4: ETH-USD, 15-min Candles, Bitfinex, Ascending Wedge
If this ascending wedge breaks to the bottom with high volume, we can expect a price target of approximately the 50 percent retracement line — the $270s. A retracement to the 50 percent values would be a very healthy event and would most likely see a pretty substantial bounce and subsequent rally leading to new highs. To further support the thesis of an ascending wedge, we can see clear MACD divergence paired with decreasing volume as the price continues to climb.
Overall, our current ETH-USD seems to be strongly bullish and doesn’t appear to show any signs of macro bullish momentum loss. Right now, it is doing healthy retracements that commonly lead to trend continuations. If you’re investing in ether, this is exactly what you want to see in a healthy bull market.
Summary:
- ETH-USD is showing healthy signs of bullish continuation for this rally.
- Although there may be some retracement along the way, overall ETH-USD looks on track to continue the bull market.
- Keep an eye out in the immediate future for a break to the bottom of the ascending wedge — a possible test of the 50 percent values (the $270 range) may be possible before continuing onward and upward!
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