Ethereum (ETH) Technical Analysis: Consolidation Almost Over, Which Way Will it Break?

Published on 06 August 2018 by Cryptovest Staff

Nothing in this article is to be construed as investment advice. Neither the author nor the publication assumes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.

Ethereum is resting along the $400 support as candles begin to tightly consolidate inside the breakout area of a nearly eight-month-long descending triangle pattern. Predicting which way the asset will breakout from this pattern over the next week will be difficult. The market is still recovering from Bitcoin’s sudden depreciation over the last seven days and Ethereum has struggled to hold on to bullish support since the start of August.

With the U.S Securities and Exchange Commission soon to decide whether to allow VanEck’s Bitcoin ETF or not, the whole crypto market is investing cautiously. The outcome of the Commission’s decision could very well be the make or break of the market going into Q4 this year.

Bullish Signals

Looking at the ETH/USD chart over 1D candles you can see that the asset has the potential to breakout bullishly off the base support, as it has done once before. The top price target for this breakout could be around $640 if support can test the new resistance trendline (blue), which connects the last two bullish peaks. This movement would represent over a 60% gain in value overall from the current price of $407.

Diving closer into the price action over 2hr candles, you can see that momentum is beginning to gather slowly behind Ethereum. Candles are beginning to ascend back towards the upper base support region at $410, with the 0.236 Fibonacci resistance above at $419 as the next test once ETH rallies further.

This movement will track well into the 3rd triangle pattern (green) in the analysis, as the price begins to lift off the 2nd triangle’s support (blue) and begins to reverse.

Indicators over this time frame are still favoring bullish traders, but bears could easily steal it away at this point.

  • MACD: has almost snaked its way back to the signal line after dropping heavily on August 1st.
  • CMF: fell back onto the zero line but has begun recovering bullishly over the last three candles.
  • RSI: has now tracked back into the middle of the index channel from the oversold area, as short-term buying momentum starts to build.
  • 25 EMA: is still bearishly below the 50 EMA but the gap is closing. If bulls can create something soon, we should have a bullish crossover here.
  • Ichimoku Cloud / T/K Crossover: Candles are now starting to approach the bearish Ichimoku cloud with a bullish T/K crossover just appearing. This will be a good sign of a reversal if candles are able to break cleanly through this cloud.

Bearish Signals

Descending triangle patterns are typically bearish patterns characterized by selling pressure progressively diminishing each bullish breakout attempt, sending the price action back down to a base support area each time. LTC/USD is a current example of how these patterns play out once the base support fails.

ETH is still holding onto the upper support area of the red region, with further support below at $390 and the bottom at $360.

The 0.236 fib resistance at $420 is a critical area for ETH going forward, if bulls fail to break through it and ETH ricochets off this level it is likely that we would see a decline into these lower support areas (red area).

Ethereum (ETH) Price Predictions

All price targets are set from the interior support level at the $390 mark.

  • Price Target 1: Retracement to the 0.236 fib level at $441.67 (13.25% ROI)
  • Price Target 2: Retracement to the 0.382 fib level at $492.20 (26.61% ROI)
  • Price Target 3: Retracement to the 0.5 fib level at $533.03 (36.67% ROI)
  • Price Target 4: Retracement to the 0.618 fib level at $573.97 (47.15% ROI)
  • Price Target 5: Retracement to the 0.786 fib level at $632.01 (62.05% ROI)