Bullish Ethereum Pattern Identified by Well-Known Analyst
Since the September 24 flash crash, the Ethereum price has been steadily increasing. However, the gains pale in comparison to the amount of value the price lost during that period.
This leads to the question of whether the recent increase is the beginning of a new upward trend, or just a retracement in response to prior decreases.
Well-known trader and technical analyst @CryptomichNL suggests that the current $183 resistance level offers important insights in determining the direction of the current trend.
On the $USD pair; looks like a bearish retest of the $183 area, while $BTC pair is also acting in resistance zone.
If breakdown, retest of the $155-160 area is likely inside this massive wedge structure.
Flipping $183 would make a bullish outlook. pic.twitter.com/i625X6Wvyw
— Michaël van de Poppe (@CryptoMichNL) October 1, 2019
A breakout above $183 would mean that a new uptrend is likely, while a failed attempt at a breakout would put the $155-$160 area into play.
Additionally, there is a long-term descending wedge developing, which is a bullish pattern.
Ethereum Resistance Levels
Looking at the six-hour time-frame, we can see that the $183 level previously acted as resistance between September 9 -16.
Additionally, it coincides with the 0.5 fib level of the entire downward move.
The Fibonacci retracement tool reinforces the current resistance level.
However, since it is not uncommon for the price to retrace the 0.618 level, we can consider the $190 level instead as the last hurdle the price has to clear before turning bullish.
Additionally, this level coincides with the resistance line of the long-term wedge.
Descending Wedge
The wedge is visible on the daily time-frame, beginning with the September 19 high.
A look at the moving averages shows the very significant resistance right above the current price level.
This reinforces the $183 and $190 resistance levels and makes it unlikely that the price will immediately move above them.
On the other hand, the RSI has been steadily developing bullish divergence.
Bullish divergence inside a bullish pattern very often indicates a price breakout.
Therefore, the price could test the $155 or even $135 support area before eventually breaking out.
While the short-term outlook looks bearish, ETH has a positive long-term outlook.
What About ETH/BTC?
On the other hand, the reading for the BTC pair is more straightforward.
The price has created a double top inside a significant resistance area.
Furthermore, this bearish pattern is accompanied by bearish divergence in the RSI.
This makes us believe that ETH will not be successful in moving above this resistance area and will soon begin to decrease.
As stated by Crypto Michaël, the ₿0.019 and ₿0.018 support levels are suitable for initiating a reversal. Meanwhile, Bitcoin is slowly recovering from its big crash after Bakkt’s futures platform launch, as BeInCrypto previously reported.
Do you think ETH/USD will break out from the wedge? Will ETH/BTC begin to decrease? Let us know in the comments below.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images are courtesy of Shutterstock, TradingView.
Disclaimer
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