With the recent recovery of Bitcoin, the price of Ethereum appears to be following suit, now showing strength after months of bearish price action. Markets are breaking key levels one by one. Will the momentum continue?
On the daily time frame, the price broke out of a descending channel pattern after bouncing off the $1,250 support. An important bearish trend line is also currently being tested and the price appears to be breaking upwards as well.
From a classic price action perspective, the market should easily reach the $2,000 resistance level as there is nothing to stand in the way. However, when analyzing the 200-day moving average, which is currently sitting near $1,700, it becomes clear that this could be a significant hurdle for Ethereum.
If the price manages to break above the aforementioned moving averages and eventually the $2,000 resistance zone, the market structure will finally be viewed as bullish after months of consecutive downtrends. Therefore, ETH may reach higher prices in the medium term.
Source: TradingView 4-hour chart
The 4-hour time frame is also bullish as the market impulsively broke the $1,400 level and rallied towards the $1,800 resistance.
However, the RSI indicator is currently showing a clear bearish divergence. The signal points to a possible correction or reversal in the near future, with the former more likely as there appears to be minimal static resistance ahead of $1,800.
In the event of a deep correction, $1,400 can now act as a key support level and push prices higher.
Source: TradingView Sentiment Analysis Ethereum Coinbase Premium Gap
The chart below shows the Coinbase Premium Gap, which is the Ethereum price gap between Coinbase Pro and Binance. Values above 0 are interpreted as significant buying pressure on Coinbase. Values below 0 indicate a lot of selling pressure from Americans.
It is clear that this particular indicator has recovered after falling sharply below zero in May and June and has been showing positive values for the past few months.
This signal suggests that U.S. investors are starting to accumulate ETH again, which could be a bullish sign for prices as they seem to think these prices are fair for long-term investments.
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Cryptocurrency charts from TradingView.
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