Disclaimer: The findings of the following analysis are the sole opinions of the author and should not be taken as investment advice.
Ethereum, at press time, was approaching a critical moment on its chart. For the past week, ETH has swung within its descending channel as sellers kept the price in check. However, buyers responded aggressively at the lower trend line as ETH was up almost 10% in just two days.
Maintaining this momentum, ETH appeared to be looking for a key breakout, one that would allow it to regain lost levels after the sudden drop on September 7. At the time of writing, ETH was valued at $ 3,413, 2.7% higher than yesterday’s close.
Ethereum 4-hour chart
Ethereum’s descending channel was characterized by three lower highs and three lower lows. However, this trend would be interrupted if ETH spikes above the upper trend line. More specifically, a close above the previous high of $ 3,473 in strong volumes would lead to a northbound breakout. From the same, $ 3,564 could be achieved.
This result will allow a gradual recovery towards $ 4k after challenging the resistance around $ 3,840.
On the other hand, a failed breakout attempt would cause ETH to resume the move within its pattern. A dip below the 50% Fib retracement level would result in a lower low at the 78.6% Fibonacci level. From there, the market would run the risk of collapsing.
The ETH indicators showed some interesting observations. For one thing, the RSI highlighted some bullish divergences after forming higher peaks compared to price action. Furthermore, the index managed to climb above 55 for the first time in eight attempts, suggesting that the bulls have been making progress.
The Awesome Oscillator also described a favorable scenario. The index rose above equilibrium thanks to a bullish double spike setup. On the contrary, the MACD sat somewhat at odds with the RSI and the AO. While the MACD moved slowly to the north, the bullish pressure seemed to drop before the index rose above its midline.
When Ethereum tested the upper limit of its channel, there were chances of a breakout to the upside. A favorable result would push the price towards $ 3,564, a level from which a return to $ 4,000 would become a reality. However, before the price breaks north from a bearish pattern, the buying volume usually picks up on exchanges.
That was not the case with ETH right after the 24-hour trading volumes contracted by 20%. If ETH fails to clear the $ 3,473 mark, expect the price to form a new low at the 78.6% Fibonacci level.
This is a machine translation of our English version.