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Ethereum: Calculating the odds of a 34% move on the price charts

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Ethereum’s price has been consolidating for quite some time as it followed Bitcoin’s lead. Unlike other altcoins, ETH’s volatility seems to be capped for now, with a high possibility of a resurgence as it forms a breakout pattern.

A comeback in the making

Ethereum’s price action over the past fifty days has formed a symmetrical triangle pattern. This setup consists of three lower highs and four higher lows which are connected using trend lines. 

The formation forecasts a 34% move, one determined by measuring the distance between the initial swing points of the triangle. Adding this distance to the breakout point reveals the target.

Assuming Ethereum price breaks bullish, the theoretical forecasts put ETH at $3,833. On the contrary, a bearish outlook would point to a crash to $1,688.

From a technical standpoint, the bullish outlook seems unlikely considering the plethora of hurdles present to the upside. The 50-day Simple Moving Average (SMA) is the first blockade, beyond which, the daily supply zone extending from $3,187 to $3,372 will prevent any bullish moves.

On the other hand, Ethereum’s price is more likely to shatter the lower trendline of the symmetrical triangle due to the uncertain nature of Bitcoin and the lack of support levels. This outlook forecasts a 34% crash to $1,668.

Interestingly, this level coincides with the support level that extends all the way back to 28 March 2021.

Source: ETH/USDT on TradingView

Supporting this bearish outlook is the recent uptick in the supply of ETH on exchanges. The total number of ETH present on centralized entities indicates investors’ intention to sell should the need arise.

In case of a flash crash, the downswing will steepen if these holders panic sell their holdings. For now, the number of such tokens has increased from 15.53 million to 16.83 million – Net inflow of 1.3 million coins. 

This 8.3% increase further lends credence to the bearish outlook obtained from a technical perspective. 

While the scenarios are looking grim for Ethereum’s price, a bullish move, one that pierces the 200-day SMA at $3,530 will create a relatively higher high and invalidate the bullish thesis. In such a case, investors can expect ETH to make a run towards the target of $3,833, completing the 34% ascent.

In some cases, the rally may extend to the $4,000-psychological barrier. Here, ETH may be likely to set a local top.

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Jibin Mathew George is Editor-in-Chief at AMBCrypto. A domain expert in International Relations (European Politics), he has always been a believer in the unlimited possibilities afforded by blockchain and by extension, cryptocurrencies. As someone who has been watching and writing about this space for over 5 years now, Jibin has closely tracked the emergence of cryptos and digital assets as a separate asset class in portfolios world over. A lawyer by training, he previously contributed to the News and Research desk of Diplomacy & Beyond Plus. Before his stint at D&B, he was Editor at ED Times. Jibin also takes a great interest in politics, especially the corresponding effect political decisions and fiscal policy have on the world of finance, with a special focus on cryptocurrencies.
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