The short-term technicals have improved for Ethereum and a move back to weekly highs at $4500 appears on the cards.
Ethereum (ETH/USD) continues to find solid support in the $4000 area, as has been the case on so many occasions since the cryptocurrency broke back above this level back in mid-October.
Since last week’s near $1400 tumble from near $4800 to as low as the $3400s, ETH has been more stable and in recent days carved out a rough $4000-$4500ish range. At present, ETH/USD is trading around just under $4100, having chopped between the $4000 and $4200 levels today.
Push Back to Weekly Highs Possible?
The short-term technicals suggest a move back to test weekly highs near $4500 is on the cards. Since topping out for the week during Thursday’s Asia Pacific session, Ethereum price action had been suppressed by a bearish trendline. But prices pushed above this trendline a few hours ago.
In wake of another rise in the pace of annual consumer price inflation in the US, which increases the demand for crypto assets like Bitcoin and Ethereum as inflation hedges, prices moved higher to test resistance in the $4200s. Prices were rejected and subsequently tumbled back to test $4000 again, but the cryptocurrency has again found support in this area, with the retest of the prior downtrend also helping.
ETH bulls may use the latest pullback to key areas of short and long-term support as an opportunity to reload on longs. The short-term 14-period Relative Strength Index seems to send a similar message. Before breaking above the recent downtrend a few hours ago, the RSI has fallen below 30.00 (signaling oversold conditions), accurately predicting a rebound.
Over the past few weeks, the 14-period RSI on the one-hour candlesticks has had a good track record of predicting that ETH is going to either rebound or at least consolidate once conditions have become oversold.
Longer-Term View
Looking at ETH/USD over a longer time horizon, the picture is not so clear. The cryptocurrency has carved out a rough $4000-$4800ish range since the start of November which has been for the most part well respected.
As a result of the rangebound conditions, momentum indicators are largely neutral; the (based on the convergence/divergence of the 12 and 26 exponential moving averages) is in broadly neutral territory. Meanwhile, 14-day RSI has spent most of the last month undulating 45 and 55, not coming close to either overbought or oversold conditions (that would be above 70 or below 30).
Thus, the main takeaway for Ethereum traders here is that playing the long-term ranges might be the best option in the days/week ahead.
