ETHEREUM: CALCULATING THE ODDS OF A 34% MOVE ON THE PRICE CHARTS
Ethereum’s price has been consolidating for quite some time as it followed Bitcoin’s lead. Unlike other altcoins, ETH’s volatility seems to be capped for now, with a high possibility of a resurgence as it forms a breakout pattern.
A comeback in the making
Ethereum’s price action over the past fifty days has formed a symmetrical triangle pattern. This setup consists of three lower highs and four higher lows which are connected using trend lines.
The formation forecasts a 34% move, one determined by measuring the distance between the initial swing points of the triangle. Adding this distance to the breakout point reveals the target.
Assuming Ethereum price breaks bullish, the theoretical forecasts put ETH at $3,833. On the contrary, a bearish outlook would point to a crash to $1,688.
From a technical standpoint, the bullish outlook seems unlikely considering the plethora of hurdles present to the upside. The 50-day Simple Moving Average (SMA) is the first blockade, beyond which, the daily supply zone extending from $3,187 to $3,372 will prevent any bullish moves.
On the other hand, Ethereum’s price is more likely to shatter the lower trendline of the symmetrical triangle due to the uncertain nature of Bitcoin and the lack of support levels. This outlook forecasts a 34% crash to $1,668.
Interestingly, this level coincides with the support level that extends all the way back to 28 March 2021.
Supporting this bearish outlook is the recent uptick in the supply of ETH on exchanges. The total number of ETH present on centralized entities indicates investors’ intention to sell should the need arise. In case of a flash crash, the downswing will steepen if these holders panic sell their holdings. For now, the number of such tokens has increased from 15.53 million to 16.83 million – Net inflow of 1.3 million coins.
This 8.3% increase further lends credence to the bearish outlook obtained from a technical perspective.
While the scenarios are looking grim for Ethereum’s price, a bullish move, one that pierces the 200-day SMA at $3,530 will create a relatively higher high and invalidate the bullish thesis. In such a case, investors can expect ETH to make a run towards the target of $3,833, completing the 34% ascent.v
In some cases, the rally may extend to the $4,000-psychological barrier. Here, ETH may be likely to set a local top. crypto-industry. What’s more, some investors might want to know whether the Musk x Saylor discussion did indeed help shift some prices.
However, Dogecoin was in the red at press time, while Bitcoin and Ethereum were struggling to stay in the green zone.
In fact, there may be larger factors at play as traders await the Federal Reserve’s decision on a rate hike. This is key for experts who are concerned by Bitcoin and Ethereum’s correlation with the S&P500’s movements this year. Data from Santiment further revealed that the “crypto crowd” is highly interested in interest rates and Fed actions, based on the social volume of keywords. Santiment also suggested the developments could lead to a “make-or-break” week for the top two assets which have been struggling to cross previously surpassed resistance levels.
Ergo, a tweeted dialogue between Musk and Saylor might not be as impactful as actions taken by America’s administration.
Fear pill or greed pill?
Twitter aside, how are Musk and Saylor’s own investments shaping up? Both Tesla and MicroStrategy keep huge volumes of Bitcoin on their balance sheets. At press time, Tesla shares were down by 7.12% in five days while MicroStrategy shares fell by 5.85% over the same period.