Ethereum went back and forth a bit on Tuesday, having a quiet day trading in a tighter range before closing the daily candle slightly positive but almost unmoved. This is interesting as ETH's consolidation appears to be forming a sideways-moving triangle pattern that's tightening to its third point. This is, of course, a consolidation pattern that typically results in a breakout or breakdown, depending on the previous price action and which way the momentum is building up.
Based on the price action shown in the chart above, it looks like ETH is moving to break out to the upside, but is still within the confines of the triangle's downward-sloping upper trendline. Bear in mind, this is a rough sketch on my part but I think no matter how you draw it, this is a sideways-trending consolidation pattern. I think the real question is whether this pattern trends or breaks to the upside or downside. Now, it's important to note that ETH could just as easily get rejected by the $600 resistance level just above and break bullish necks to the downside. Ultimately, my short-term bias is for a pullback - not significant, maybe down to the $500 level -- but in the medium-long term, I think it's a no-brainer bullish prospect.
If ETH breaks out to the upside, I'll be looking for an impulsive candle breaking above $600 and then finding support there before rallying higher to a new local high up to the $700 level and very possibly higher. Looking again the chart above, you can see a flat resistance level with an ascending trendline with higher lows, indicating rising buying pressure.
Ultimately, I think ETH is a better value play from an investor standpoint. I'm a buyer on dips, especially now that ETH's price hasn't moved much despite recent news of crypto index funds, Grayscale ETH Fund seeing ATH inflows, and the Toronto Stock Exchange's QETH.U Ethereum Fund announcing an IPO are huge bullish developments. In the medium-long term, this will likely serve as massive catalysts for significantly higher price movements.
Support: I'm looking for support around the $550 level, then $500, and ultimately $400, which is my line in the sand. The 50 Daily EMA is rapidly approaching $500, and the 200 Day EMA is approaching the $400 level, which should give further support to the long-term uptrend.
Resistance: $600 is immediate resistance until we get an impulsive candle above it and holding it. After that, ETH will look toward $700, $800, and $1,000.
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