Ethereum oscillated in a tight range during the week ending September 27th, falling a bit to about the $350 level which it has been testing support. This is a bearish price setup, no doubt about it, but looks to me like ETH is digesting its gains from a strong wave 1 in a 5 wave structure. That puts us in a wave 2, where price consolidation and short-term weakness may continue while ETH looks for major support before the upward mobility resumes.
(October 4, 2020 8:00 PM EST)
Like Bitcoin, Ethereum is in a consolidation pattern, trading between $350 and $400. This is beginning to act as sort of a short-term trading range, at least for now. When you zoom out or consider the weekly chart above, it's easy to see how extended ETH got to the upside. Given how far it is from both moving averages, it would make sense to see a pullback to the 50 Week EMA to digest these gains and build up some momentum for the next leg up. This would also align well with a Fibonacci retracement to the 38.2% level or even 50% above, thus completing a Wave 2, before commencing the impulsive 'face-melting' wave 3 to higher highs (locally). Everything is on track for another bull run in the crypto market, especially for marquee projects like Ethereum, which are "weeks away" from launching Phase 0 of its ETH 2.0 scaling solutions network upgrade. The Federal Reserve has maintained its intention to continue printing money ad infinitum to the tune of ~2%, continually inflating the US Dollar (other governments are doing this as well in the EU), which, economically, should bode very well for fixed or limited supply assets like ETH. Seeing as how 90%+ of Crypto projects are built on the Ethereum network, and given all the government and multinational conglomerates that are collaborating or researching how to work with Ethereum, the stars are aligning for a comfortable next few years.
Support: Ether is currently trading well above the 50 and 200 Week EMA's, which should act as major long-term support below around ~$255-265, which is also around the 50% fibonacci retracement level. If ETH falls below the 200 Week EMA around $250, the overall uptrend is in jeopardy. I gather this is extremely unlikely and only accomplished via the entire network being taken down, or another COVID-related March-caliber sell-off; even then, we see such an event as short-term weakness and an excellent opportunity to add and a medium-long term accumulation zone. Federal Reserve money-printing has shown that price dips on assets will be shallower as their inherent valuation relative to fiat is stronger and perpetually increasing in strength.
Resistance:
Looking ahead, this is a buy on the dips scenario, with longer-term investors looking to add on pullbacks. Next immediate resistance is $400, which has caused some friction as of late, and then the June 2018 highs around $500. If ETH can break above that, there may be some retail investors from early 2018 looking to get out from under their 3 year holds which have been red up until possibly later this year. Remember, Bitcoin has already climbed back 60% of the way to its previous all-time high; ETH is still down almost 70% from its January 2018 all-time high of $1,400, so there are probably additional sell orders ETH needs to slice through in order to get closer to making new all-time highs. $1,000 will assuredly be massive resistance, which I don't forsee ETH recapturing this year. However, 2021 is looking increasingly bullish for assets, ETH included, so I would not be shocked to see a new ETH ATH by this time next year, possibly sooner.
It's also worth noting that the ETH/BTC ratio as it currently stands is historically low and has quite a bit of room to 'catch up' to BTC's upward price movement YTD, as this ratio also works in cycles and indicates whether Ethereum is undervalued or overvalued relative to Bitcoin. Should ETH 'catch up' to BTC in the ETH/BTC ratio, this would put ETH at roughly $600-700. This is not a matter of if, this is a matter of when. Plan accordingly.
About Us:
I take time out of my day to share these with the community completely free. If you enjoy these posts, please support the channel by "Tipping" this post below, or using either of these referral links below. They cost you nothing and give me a small reward, which makes me a little happier to share these personal analyses with you at no cost.
Buy Ethereum here.
Earn Ethereum here.
