With Bitcoin snapping a fresh ATH above $67,000, market observers now awaited the world’s largest altcoin- Ethereum, to enforce a similar outcome. Currently challenging the upper trendline of its horizontal channel, Ethereum awaited a 60% run up from the breakout point, bringing its price close to $7K.
However, a failed breakout attempt could transpire into some heavy losses for ETH. Bearish divergences along the RSI and MACD presented dangers ahead if bulls are unable to clear the $4,400-mark with conviction. At the time of writing, ETH traded at $4,083, down by 2.5% over the last 24 hours.
Ethereum Daily Chart
Source: ETH/USD, TradingView
Ethereum’s three distinctive highs around $4,300 along with three lows around $1,700 indicated a horizontal channel on the charts. Since early May, ETH has respected the boundaries of this pattern, witnessing a reversal after touching its extreme ends.
Now since Aug 4, bulls have maintained ETH above the mid-line of the channel. An inverse head and shoulder took shape above $2,700 ETH prepared for an upwards breakout and a possible 58% hike based on the highest and lowest points of the pattern.
However, a closer look at some of its indicators presented a rather disconcerting picture. For instance, the RSI formed four lower peaks from early-May to late-October and highlighted a bit of a bearish divergence with respect to ETH’s price action.
Such lower peaks were also evident on the MACD. Based on such readings, ETH would face difficulty in challenging $4,400 and head back to the mid-line at $2,700 if the RSI and MACD fail to break their upper trendlines.
However, bulls can take heart from the Awesome Oscillator’s trajectory which indicated no such threats. A move above $4,400 was very much within the realms of possibility and could even transpire as soon as the broader market turns risk on.
Conclusion
ETH looked set to breakout north of its horizontal channel and target $6,500 over the next few months. However, if RSI and MACD remain restricted below their upper trendlines, ETH would be staring at the barrel of a 35% sell-off back towards the $2,700-mark.
