Ethereum rallied during the week ending October 11th, initially pulling back before rallying above the $350 level, finishing the week in the green with a bit of a bullish hammer. This shows support around the $350 level and just under, and possibly enough consolidation has occurred after spending the last 8 weeks digesting the mid-2020 rally from $250 up to nearly $500.
(October 11, 2020 8:00 PM EST)
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: Next immediate resistance is $400, which is both a round psychological number but also a lower historical resistance point. After that, look for resistance around the June 2018 highs around $500, and then $550/600. Look for resistance every $50-100, notably 2018 EWT retracement moves down, which should act as resistance this time as ETH attempts to reclimb these levels. Also, remember that 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.
Outlook: Like Bitcoin, Ethereum has been consolidating for some time now, though ETH has been in a less defined pattern, trading between $350 and $400 for nearly 2 months. This recent price action is slightly bullish, but needs follow-through if it's to be any more than simply oscillating between the lower and upper ranges of this trading band. A break above $400 indicates ETH is probably ready to move higher, targeting the $450 and $500 price levels. If you look at the second chart of ETH over the last 3 years, you'll see ETH is trading in an ascending channel, recently bouncing off the rising lower band. If this rally can get some wind behind it and close above $400, I think we could see ETH attempt to reach the top of the channel, which would probably be between $550-600. This would coincide with the late 2018 highs around $550-600, which should serve as the next major resistance. If you've seen our ETH/BTC ratio article, you'd also remember that the current ETH/BTC is quite stretched in Bitcoin's favor, and that even a small normalization of the ratio in ETH vs BTC would put ETH at around $600 or so.In the mean time, I am a buyer on dips, continuing to dollar-cost average on a medium-long term basis, looking for another bull market cycle to kick off in the next 12 months, probably peaking 2023-2024. According to my view, we are in the final stages of this accumulation phase, which means the window for accumulating more ETH at historically low prices is closing.
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