As predicted in the previous article, ETH continued its upturn and toppled its long-term liquidity range (Point of Control/POC) and the 200 EMA (green) over the past two days.
Now, ETH aimed at a possible test of its POC before continuing its upturn. As the price crossed its 200 EMA, the bulls would now continue to mount up buying pressure to snap the $3,300 mark resistance in the days to come. At press time, ETH traded at $3,337.8, up by 6.5% in the last 24 hours.
ETH Daily Chart
Source: TradingView, ETH/USD
Since losing its liquidity range at the $3,100-mark, the king alt saw major sell-offs on high volumes. Thus, ETH poked its six-month low on 24 January.
After obliging to its historical tendencies, ETH picked itself up from the 13-month trendline support. (yellow, dashed). After testing this level multiple times, the bulls finally propelled a strong rally in the last two weeks. Consequently, the alt saw an expected falling wedge (yellow) breakout on its daily chart.
During this recovery, the alt saw an over 34.3% ROI in the last 14 days while forming a rising wedge (white, reversal pattern). As a result, the price approached the upper band of the Bollinger bands (BB). Thus, from here, a likely near-term setback should not surprise the investors/traders. Following this, it would likely continue its uptrend as it broke above the POC and the 200 EMA.
Rationale
Source: TradingView, ETH/USD
The RSI corresponded with the price for the most part while marking growth in a rising wedge. Since it entered the overbought region, a potential fall from here could trigger a patterned breakdown and thus lead to a test of the 57-61 support range.
Also, the CMF reaffirmed the increasing money flows into the crypto as it managed to keep a foothold above the zero-line. However, the ADX displayed a slightly weak directional trend for ETH.
Conclusion
Considering the overbought readings on the RSI and BB with the rising wedge pattern, A short-term setback could find a cushion near its POC. With the 20 EMA crossing the 50 EMA, the bulls took on the driving seat and would now try to overturn the $3,300-resistance.
Besides, investors/traders need to closely watch out for Bitcoin’s movement as ETH shares an astounding 96% 30-day correlation with the king coin.
