Ethereum (ETH) Technical Analysis: Constantinople Hard Fork Date Confirmed, Waiting on Bulls to Move
Ethereum reigns as the best performing cryptocurrency against USD over the last seven days, with a -7.61% drop compared to other top-ten cryptos suffering double-digit losses. With the Constantinople hard fork now confirmed to take place on January 16th, there has been a noticeable surge in bullish support over the last 15 days as traders anticipate ETH to boom ahead of this major milestone update.
The Constantinople hard fork is the second part of the ‘Metropolis’ Ethereum development stage, and involves implementing a number of Ethereum Improvement Proposals (EIPs) to make transitioning Ethereum from a Proof-of-Work blockchain over to a Proof-of-Stake blockchain smoother and much easier. Some of these changes include reducing the ETH block reward - stripping it down from 3 ETH to 2 ETH - as well as delaying the difficulty bomb by 12 months in a bid to gradually phase out ETH mining (EIP 1234). Other EIPs include changes to facilitate off-chain scaling solutions (1014), optimizing large-scale code execution (1052) and revising the gas cost scheme for the SSTORE opcode (1238).
As Q4 draws to a close however, the recent bullish momentum that catapulted ETH over 98% from $83 to $163 now appears to be waning as buyers struggle to break above the $145 resistance. Has Ethereum peaked too soon ahead of its next milestone upgrade, or will bullish traders pull off another huge run as we edge into Q1 2019? Let’s take a look.
On the 1D ETH/USD chart, we can see that the asset was recently able to break out of a long-standing falling wedge shape that ETH had been tracking inside of since June 1, 2018. After rocketing 98% off the bottom in the nine days between December 15 - 24, bearish sellers quickly took back control of the asset once it had peaked at $163 and pushed it back down to the $118 support.
From there, a second impulse movement from bullish traders allowed ETH to retrace back to $145 where the asset has been collecting around for the last three days.
Looking at a number of indicators over broader time periods, we can see some promising signals that suggest Ethereum is entering into a new long-term bullish phase:
-For the first time since May 2018, the 1D price action is now closing above the 50MA.
-On the 1D Chaikin Money Flow indicator, there has been a clear uptrend of increasing buying pressure since November 20.
-On the 1W MACD indicator, we can see a bullish convergence between the 12 and 26MAs, as well as buying candles on the histogram for the first time since November 2017!
Over a closer four-hour time period, however, we can see that bearish traders are currently working hard to hold down Ethereum’s price action - defending the $145 resistance against a bullish continuation. This increase in selling pressure has weakened bullish sentiment today and we are now starting to see signs of a bearish trend reversal appear on the indicators:
-There is a bearish divergence between the 12 and 26 MAs on the MACD indicator, with selling candles appearing on the histogram.
-The indicator line on the CMF is starting to cross down through the zero line as buying pressure diminishes.
-On the Parabolic SAR, we can see indicator dots have already started appearing above the price action as the trend turns bearish.
-The Aroon indicator also supports a bearish trend reversal, with the Aroon Down line crossing above the Aroon Up line.
From these signals, we should expect Ethereum to break bearish and seek support further down below in the short-term before bulls re-engage with the asset. This does not necessarily mean doom for ETH as we could see a bullish pennant form from the correcting price action.
Ethereum Price Targets
All ROI’s are set from the assets current value at $140.
R1: $145 (3.57% ROI)
R2: $160 (14.29% ROI)
R3: (28.57% ROI)