After finding a bottom near $900 last week, Ethereum has been on a run, rising over 30% this week from its lows to reclaim the $1200 mark. ETH is the top alt-coin, and as such is generally the lead indicator for what the rest of the alt-coin market is doing. With ETH significantly out-performing BTC this past week, other alts have gone on runs too: SOL is up 35%, BNB is up 14.3%, and MATIC is up over 50%!
Let’s take a look at the charts and see what comes next for ETH.
Ethereum Price Analysis
On the low-timeframe 4H chart, ETH has finally broken above the 50SMA – the first key to establishing a new trend. The 50SMA is located at $1.1k, and will now act as support upon any retrace. Next up is the 4H 100 SMA resistance – currently just under $1.3k. I do not expect this resistance to break upon first test.
On this move up, ETH is becoming overbought. The RSI is getting to close to 70 which is the traditional “overbought” signal, and the Stochastic is at 100. This means that, on our short time frame, ETH is likely going to run out of gas at resistance and will need to retrace or consolidate before making further gains.
On the daily candle chart, ETH is still significantly below all its moving averages. The nearest is the 50SMA, trading at over $1.7k. This is another key resistance level to watch and was previously a consolidation zone for ETH before last week’s dump. A sustained uptrend over the next week could bring ETH back to this key zone.
Daily momentum indicators look indecisive, as the RSI is just exiting the “oversold” phase, but Stochastic is entering “overbought” phase. The Stochastic tends to move to the extreme ends of its range, and has some room to continue, so this has a slightly bullish tilt. In light of the required consolidation on the 4H, I expect some consolidation here too before moving up.
On our long-timeframe-view, ETH looks heavily oversold and ready for a move up. Closing a green candle this week (the first in months) could give ETH the fuel it needs to break out of its slump. Key resistance on this time-frame will be the $2.5k zone, which was the most recent area of consolidation earlier this year.
Ethereum Investor Sentiment
Ethereum investors are feeling the fear as ETH’s price retraces to levels not seen in years. Generally speaking, extremely fearful levels are usually overblown and occur when FUD is at its peak. Such times are good to begin averaging into new positions.
Ethereum Fundamental Analysis
ETH’s future will be dictated by the success or failure of the Merge – the network’s transition to Proof of Stake. This transition will have a “triple halvening” effect, reducing emissions by 90% and locking new rewards for 6 months. Even at ETH’s current relatively low level of network usage, ETH would still be deflationary as network fees are burned. Over the past 7 days, ETH has burned 25% of emissions (according to watchtheburn.com).
BanklessTimes reported an update this week on the Merge’s timetable, confirming it for this August. More can be read here.
Conclusion
ETH’s fundamentals have bottomed, the merge is coming, and on large-timeframes, the asset is extremely oversold. On the 4H and Daily, some consolidation may be necessary, but in the mid-to-long term, ETH may perform quite well.
Support Zones:
- $1.1k
- $900
Resistance Zones
- $1.3k
- $1.7k
Not investment advice. Do your own research.
