Ethereum (ETHUSD) Technical Analysis: Trend Line Break and Reversal

Ethereum was previously trading below a descending trend line and has broken above it to signal a reversal in the works. Price also seems to have completed its retest and might be setting its sights on the next upside targets.

Applying the Fib extension tool on the latest pullback shows that the 61.8% level lines up with the swing high that might be the first upside target. Price appears to be hitting a ceiling at the 38.2% extension, though.

Still, the 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the reversal is more likely to gain traction from here. Also, the 100 SMA is holding as dynamic support and could continue to keep losses in check. The 200 SMA lines up with the swing low at $120 to add another floor in case of a dip.

RSI is pointing up to signal that buyers are in control and could keep pushing for gains. However, this oscillator is nearing the overbought zone to signal potential exhaustion. Stochastic is also moving up to confirm that bulls have the upper hand but that sellers could take over soon if it reaches the overbought zone and turns lower.

Cryptocurrencies seem to be off to a good start for the year, though, as optimism on institutional investments in the months ahead are in play. If this positive sentiment could stay on and be reinforced by actual developments or a pickup in volumes, ethereum could stand to see more gains and draw more buying pressure.

On the other hand, increased focus on regulation or industry troubles could dampen any rallies and keep ethereum and its peers on their toes in the days ahead. A lot seems to be riding on how altcoins perform in the first few weeks of the year as an indicator of how it might fare for the rest of 2019.

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