Ethereum: This resistance zone might open up shorting opportunities
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Ethereum’s latest hike above $2300-$2400 saw the price finally break north of its horizontal channel after three attempts since 22 June. While this was an important bullish development, one that reinforced ideas of a probable recovery towards record levels, few uncertainties remain.
At the time of writing, ETH was being traded at $2,460, up by 4.9% over the last 24 hours.
Ethereum 4-hour chart
ETH’s next target now lies at the $2,550-$2,650 resistance and failing to rise above this area would result in a correctional phase for the digital asset. This would likely see ETH head back towards the upper trendline of its pattern.
The Visible Range’s POC also lay close to this trendline as ETH saw a lot of interest around $2,360. The projected retracement would open up shorting opportunities for traders, but there seemed to be an element of risk in such a position.
The Relative Strength Index moved within an ascending channel and could find its way towards the oversold zone over the next few trading sessions. Such a move would require stabilization before ETH made its next upwards push.
The Directional Movement Index’s +DI held itself above the -DI, but the two lines did converge, indicating a dip in buying pressure. A bit of a bearish divergence was also spotted on the MACD which made lower highs.
There was an indication that bullish momentum could fizzle out as the price approaches the resistance zone of $2,550-$2,650. Traders could capitalize on this and short ETH once the price touches its upper ceiling.
Take-profit can be set just above the Visible Range’s POC of $2,370. However, such a setup does involve a high element of risk. In case Bitcoin breaks above $42,000 backed by strong volumes.