Ethereum Sets Up Reversal to the Upside as the Crypto Markets Regain Strength
Crypto Markets: After a harsh correction, will Ethereum have the strength to rebound?
For yesterday’s market analysis, click here.
Covered:
- Ethereum Pulls Back
- Ethereum Finds Strong Support
- What A Reversal Looks Like
- Bullish Divergence on the RSI
- Where Do We Go From Here?
Crypto Markets: Ethereum Pulls Back
Anyone who has been following crypto lately will know that Ethereum has been on an absolute tear. Since the start of October, it has gone up 64%, hitting numerous all-time highs along the way to reach a peak of over $4,800.
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However, the past few days have seen a strong move to the downside. Ethereum’s price plunged beneath the 20 Day Simple Moving Average (SMA), represented by the yellow line. With this break we saw a swift and harsh move down, and a big red candle.
This move down, however, might end up being short-lived, as Ethereum seems to be setting up a reversal pattern. Let’s take a look at the daily chart.
Ethereum Finds Strong Support
Just like clockwork, the Ethereum price got a perfect bounce off the 50 Day SMA (green line), sitting just above $4,000, and is currently attempting a move higher. The support at this level is being further strengthened by the psychological importance of a big round number, which traders often use to buy in or take profits.
On September 3rd, the price also topped out right there, marking a key spot on the chart. Now, these factors have all converged, and so far at least, support has held.
What A Reversal Looks Like
Nothing is yet confirmed, but Ethereum is currently printing a strong daily “hammer candle,” with a long wick to the downside and price action currently trading near the high of the day. This shows that the Bears attempted to push the price down, but got rejected by the Bulls, who now seem to be in control.
Along with yesterday’s candle, which also has a wick to the downside, we are seeing a “tweezer” style bottom, signaling a potential reversal to the upside. This is a very important daily close for Ethereum, with the Bulls looking for strength leading into end of day.
Bullish Divergence on the RSI
To further strengthen the thesis that Ethereum is attempting a move to the upside is the Bullish Divergence forming on the Daily RSI. This can be seen with a lower low being formed on the RSI, and a higher low printing on the price chart.
At the very least this is showing a loss of momentum to the downside, and at best signaling that a reversal is imminent.
Crypto Markets: Where Do We Go From Here?
In the immediate short term, Ethereum is finding some resistance at the 50 SMA on the hourly chart. That is the first hurdle that must be overcome. Next, it would need to break the previous hourly chart high at $4,350.
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A move above there would most likely bring the price up to test the 20 Day SMA around $4,500. A break above there could potentially begin the rally to new all-time highs – but one step at a time.
If daily, or even four-hour candles begin to close below our strong support at $4,000, the probability of a move down to about $3,600 – $3,300 will become likely based on previous price action.
All eyes on the daily close.
The post Ethereum Sets Up Reversal to the Upside as the Crypto Markets Regain Strength appeared first on CryptosRus.
Text source: CryptosRus
