Ethereum’s Viability And Sustenance: A Technical Analysis

From a utility perspective, Ethereum (CRYPTO:ETH) may garner better favors when weighed against Bitcoin (CRYPTO:BTC). This is due to the fact that Bitcoin will still need electricity (as a proof-of-work currency) to facilitate transactions, while Ethereum has already instituted an innovative diversification to Ethereum 2.0 as a medium with better competence. Aside from this, Ethereum offers significant additional worth (such as with NFTs) which helps put Ethereum in a new light that there is more to it than being a cryptocurrency. In the real sense of it, Ethereum is a full operating system. 

Since our view of the future places crypto as a major player, Ethereum may look stronger and more promising than Bitcoin. The 2021 trend, so far, aids this claim to be potentially valid and highly probable as Ethereum’s recovery strengths vis-à-vis Bitcoin give Ethereum more room for credibility. The chart below examines the performance of Ethereum against Bitcoin with higher prices that give a bullish edge towards Ethereum over Bitcoin.

James Stanley, Tradingview

What should we expect from Ethereum in the immediate coming days?

The Ethereum price reached a low of $2164 on April 26. From there, it went on a steady increase to an all-time high of $4,375 on May 12 before going on a bearish trend, forming a head and shoulder from May 9 to May 16 to usher in the downtrend. Though not confirmed yet, there is a break in the trend line structure, indicating an upward trend.

ETH Price: Symmetric Triangle

The price of Ethereum is analyzed at four-hour intervals from May 6-May 31 in order to analyze its current pattern.

On May 6, ETH/USD continued in a bullish trend from $3430. A gradual upward move ensued, which took it to an all-time high of $4,375 on May 12. This was followed by a gradual decrease till $1723 on May 23 before the price shoots up again.

Since May 26, the price has been creating lower highs. Tracing them gives us a symmetric triangle:

TraderFav, MetaTrader 5

At the time of writing, the ETH price is trading outside the triangle.

Having broken out, is that the beginning of its rally back to the upside or will it retest the broken trend line? In order to answer that, a look at technical analysis in a long-term time frame is required.

Ethereum Price: Bearish Divergence

TraderFav, MetaTrader 5

The Ethereum price is analyzed alongside the RSI below:

The ETH price reached a higher low on May 30. The candlesticks have characterized no wicks, squeezing the trade in a triangle. This indicates that there may still be a breakout to either the upside or the downside in the market.

During this period, the RSI generated lower highs. This is phenomenon is termed a bearish divergence and it usually occurs before a decrease in price. In the case of ETH, it preceded the downward move beginning from the May 26 high of $2846. However, a break from the trend pattern is testing on May 31.

Supply and Demand Zones

TraderFav, MetaTrader 5

The Ethereum (ETH) price is analyzed at H4 intervals alongside the supply and demand zones.

On May 19, the Ethereum price (ETH) continued a rapid downward move, took a short break, and formed abasing candle that initiated a supply zone around $2995. Succeeding the break is a bearish candle that precedes a bullish candle which formed the basis for the demand zone around $1817.

It rallied back to the supply zone on May 20, forming more touches on the supply zone to establish the zone as a key supply zone before heading way down to establish another touch around $1733 to confirm the demand zone. Furthermore, it created inside support of around $2168.

Seeing this in perspective of the bearish divergence in the previous section makes it likely that the price will continue to decrease. However, a breakout on May 31 makes the forecast to subjective to a retest.

Broken Trend Line

TraderFav, MetaTrader 5

A broken trend line is observed at $2532 on May 31.

Most conservative traders may need to wait for a retest of the broken trend line, a candlestick that confirms the retest, and a possible continuation of a bullish movement. This is to ensure it is not a false breakout where the market could rally back into the trend line and continue its bearish movement.

Summary

To conclude, the Ethereum price (ETH) has recently experienced a volatile decrease. The technical analysis paints a probable bullish bias. A retest of the broken trend line will confirm the validity of the bullish bias.