Ethereum was consolidating inside a symmetrical triangle for quite some time and has finally made a breakout. Price was able to bust through the top, signaling that a climb of the same height as the chart formation may be in order.
However, the 100 SMA is below the longer-term 200 SMA to hint that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Still, the gap between the two is pretty narrow so a crossover may also be a possibility.
Stochastic is heading north so price could follow suit while buyers have energy left, but the oscillator is nearing overbought levels to reflect exhaustion. RSI is already turning lower to suggest a return in selling pressure, so a retest of the broken triangle top might take place.
If the area of interest at $200 holds, ethereum could gain more traction on its climb and head up by around $100 or the same height as the triangle.
Optimism in the crypto markets appears to be returning as traders are looking ahead to future developments. In particular, anticipation for stronger institutional investment may be building up and ethereum traders might also be looking forward to SEC guidance on ICOs.
Keep in mind that these are usually built on the ethereum blockchain but the volatility in price and the poor execution of a handful have led to a lot of profit-taking recently, triggering weakness for ethereum as well. A regulatory framework could help make this particular part of the industry more secure, weeding out fraudulent ICOs and supporting ethereum’s legitimacy.
Risk appetite also seems to be returning to general financial markets, also providing some support for cryptocurrencies while risks related to the US election, Brexit, and Italian debt start to fade.