Ethereum (ETH) is following Bitcoin (BTC) in breaking out of a local bottom, and is now engaging with its first support target. And like with Bitcoin, we have a chance to see a reversal of the recent MTF correction (Ethereum here has performed better than Bitcoin). The following days will help us understand how much force is behind this surge.
We start on the 4-hour chart, and see the ETH breakout above the neckline of a local bottom structure after a week and a half of consolidation. We’re seeing higher highs and lows on the RSI now, and a consistent presence on the positive side of the histogram.
The first resistance zone has already been engaged, and we can probably expect this leg to continue up to $245 where the zone ends.
On the daily, we see that the main inflection zone is sitting at about $239. We would like to see ETH close above this level today and hold it, in order to start considering the MTF downtrend under threat. If it can’t do that, we would at least like to see the 21 EMA held. This is because there is nothing really stopping ETH from rolling back over and continuing its larger downtrend.
The indicators, however, look good. The 55 EMA was sharply defended for a week, and the histogram is accelerating in a bullish expansion.
There is another reason in support of the bull case, which is the ETH/Bitcoin chart. On the 4-hour chart, we see that a sideways consolidation has also broken out to the upside. This extra steam will propel any innate ETH/Dollar movements, which are closely tied with Bitcoin’s own price.
It is still early stages, and we may only really have a LTF leg up. The larger stakes are, though, a larger trend change to the upside.
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