Ethereum Continues Its Ascent, Targeting Overhead Resistance

Highlights

• The Ethereum price broke out from an ascending channel.
• There is support at $155 and resistance at $195.
• The price is facing resistance from the 200-day moving average.
• It may be following an ascending support line.

The Ethereum price has increased significantly since the beginning of the year when it was trading near $130. Technical analyst @LomaCrypto posted an Ethereum price chart, outlining a movement in which a bearish head and shoulders pattern (H&S) was followed by a false breakdown and a price pump that took it to new highs.

I forgot the other part..

Print the H&S, bear trap it with a bearish retest and then pump it. pic.twitter.com/uarMnq0w5G

— Loma (@LomahCrypto) January 29, 2020

Currently, the price has reached the top of the H&S. This article will cover the ETH/USD pair. BeInCrypto covered the ETH/BTC pair here.

Ethereum Logarithmic Curve

First of all, it is worth looking at the weekly logarithmic chart. Due to the possible curved ascending support line, it is possible that the $122 low reached on Dec 19, 2019, was the low prior to the next bullish market cycle. In this case, this low could be similar to those reached in January 2016 and 2017, prior to the preceding bullish market cycles that had rates of increase of 1,534% and 5,201%, respectively. In order to reach a new all-time high, an increase of 1,287% would be required measuring from the $122 low. Therefore, if a new bullish market cycle transpires, a new ATH would definitely be in reach. With that in mind, let us move to the shorter-term analysis.

Ethereum Breaks Out

The Ethereum price had been trading inside a descending channel since Aug 6, 2019. On Jan 14, 2020, the price broke out from this channel and validated it afterward on Jan 24. This retest also validated the $155 area, which is now likely to act as support. The closest resistance area is found at $195.

Overhead Resistance

A closer look at the price movement reveals a double-top combined with a bearish divergence in the daily RSI. However, the divergence is not very pronounced and the daily candlestick has yet to close, so we are not considering it significant enough to call for a breakdown. A more important development seems the 200-day moving average (MA). The price has yet to close above it, which would be very important for the state of the upward trend. In the shorter-term, the price is following a possible curved ascending support line. In addition, we can see that the breakdown from the H&S caused the price to validate the support area and the ascending support line, so in hindsight, it seems quite reasonable. The RSI has bounced above 50 and is moving upward. Therefore, as long as the ascending support line is intact, the price is expected to reach $195 soon. To conclude, the Ethereum price has broken out from a descending channel and validated it as support afterward. The increase will likely continue at least until the price reaches the resistance area outlined above. A price decrease below the ascending support line would invalidate this possibility.