Ethereum rose Tuesday, in part because of its positive correlation with Bitcoin, the top cryptocurrency that was also making gains, and in part because the Chicago Mercantile Exchange will effectively offer Ethereum futures starting February 8, 2021.
During the early European session, trades poured into the second largest cryptocurrency, pushing its prices down 6.07 percent against the US dollar to a weekly high of US $ 1,458. That’s only $ 19 less than the recently set record high.
Technical chartists highlighted Ethereum’s recent uptrend to confirm a bullish pattern known as the ascending channel. Crypto YouTuber Lark David presented a chart that showed that ETH / USD was maintaining a short-term price cap with a horizontal trend line.
Meanwhile, the analyst also noted a series of lower highs forming below the horizontal resistance, presenting it as a super-bullish outlook for Ethereum.
According to Lark Davis, Ethereum is testing the upper trendline of the so-called ascending channel pattern for a breakout move. Source: ETHUSD on TradingView.com According to Lark Davis, Ethereum is testing the upper trend line of the so-called ascending channel pattern for a breakout move. Source: ETHUSD on TradingView.com
According to the technical description, the breakout target of the Ascending Triangle chart of Ethereum is over $ 2,000.
Ethereum’s recent uptrend was alarmed by the growing bearish divergence prospect on a daily time frame chart.
So it seems that the ETH / USD exchange rate has risen despite the drop in volume and momentum. Technically, there was a risk that the prevailing uptrend would slow down at some point, which could lead to a deeper pullback on the downside.
Ethereum’s declining risk of divergence could lead to lower prices. Source: ETHUSD on TradingView.comEthereum bearish risk of divergence leads to lower prices. Source: ETHUSD on TradingView.com
Meanwhile, a twisted version of the Descending Triangle pattern showed that Ethereum is trading within a falling wedge structure. In retrospect, a falling wedge is a bearish reversal pattern that forms after an asset makes a series of higher highs and lower highs within a contraction channel.
After or before the vertex – the point where the two trendlines converge – the asset will decrease by as much as the maximum height of the wedge. This carries the risk of ETH / USD dropping to the middle of $ 1,000.
The bearish analogy is somewhat in line with the divergence discussed above. Currently, it remains the only short-term technical barrier between Ethereum and a valuation of $ 2,000.
Long-term scenario for Ethereum
A correction could cause ETH / USD to retest its 50-day simple moving average wave (blue) near USD 1,025 – almost in line with the wedge target. Bulls may find the level attractive enough to increase their spot long positions, which would lead to a rebound.
The ETH / USD exchange rate could then attempt to move towards its 20-day simple moving average (green) and move higher if the fundamentals match.
Messari’s Ryan Selkis brings a bullish catalyst to the fore.
According to the researcher, after the recent WallStreetFrenzy fiasco, Ethereum could find greater adoption among established traders and investors. In retrospect, the trading platform Robinhood had stopped trading heavily discounted stocks after an army of individual day traders began placing bullish bets on them.
“Buy bitcoin to hedge against inflation and potentially make a lot of money, but also to tell your government to leave,” wrote Selkis. “Buy Ethereum to secure the fledgling decentralized financial system and potentially make a lot of money, but also to tell your bank to leave.”
“Buy DeFi assets to increase liquidity, make additional investments in better financial infrastructure, and potentially make big bucks, but also to tell your broker, lender, or money manager to leave,” he added .