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Ethereum (ETH) is trading in an important horizontal area that previously provided resistance. ETH is also trading at the intersection of short-term support levels that could be key in determining future trends.
Resistance Line in Ethereum
Technical analysis on the daily timeframe may show that the ETH price has been trading within a rising parallel channel for the last 95 days. The upward movement reached a peak of $2,717 on January 12th, confirming the channel’s resistance trend line. Currently, ETH is trading in a significant horizontal area that previously provided resistance. A bounce could confirm this as support. The daily Relative Strength Index (RSI) is in a downward trend. Investors use the RSI as a momentum indicator to assess market conditions, determining whether a market is overbought or oversold, and whether a token should be accumulated or sold.
If the RSI value is above 50 and the trend is upward, the bulls still have the advantage, but if the reading is below 50, the opposite is true. The RSI showed a downward trend before the decline and is currently below 50, both of which could be signs of a bearish trend. Despite the ongoing decline, cryptocurrency investors and analysts remain bullish on Ethereum’s price.
Bullish Formation in ETH
While the daily timeframe shows a downward trend, the four-hour chart could indicate a potential bounce due to price action and RSI readings. Price action shows that ETH has bounced off the support trend line of a rising parallel channel. This could also coincide with the support trend line of a short-term descending wedge. This situation is considered a bullish wedge formation. Additionally, the four-hour RSI briefly dipped into the oversold territory before exiting today.
If the ETH price breaks out of the wedge, it could rise by 8% to reach the channel’s resistance trend line at $2,580. The trend line also coincides with the 0.618 Fibonacci retracement resistance level. Despite the bullish forecast for ETH price, a break from the channel could trigger a 9% drop towards the nearest support at $2,170.
