four assorted color glue stick bottles

After making fresh all-time highs back on the 10th November with levels just shy of $4,900, the Ether (ETH) price has retraced back down. It currently trades at $4,092, up slightly on the day. With many seeing the Ethereum network as one of the most valuable elements of the blockchain system, it stands to reason that fundamentally, ETH should hold it’s value. For the purpose of our piece today, we want to look at the technicals side, in our TechTalks series.

Support holding but neutral momentum

As with all of our TechTalks, we like to consider the long-term picture first before moving to shorter timeframes. The below chart shows daily candles for the past ten months. We flag up the 100 DMA line in red as a long-term support line. Bar the break below this in June and the subsequent break back above in August, this has provided a good level for ETH to bounce from. We note this as a holding area seen back in September, and as a measure we’ve been watching over the past month.

What does this tell us about the future direction? Well if we see ETH hold above this trend line, then we’d suggest that $5,000 looks more likely in the coming months. At the moment, the coin sits just above the 100 DMA, so is fairly neutral in terms of a bias. This is backed up when we look at the Commodity Channel Index (CCI). This is a momentum based indicator that at a simplistic level flags overbought (above 100) and oversold (-100). As we can see, ETH currently sits around 55. This indicates that the momentum is neutral.

Source: IG

Short-term resistance around $4,400

Next we move in on the timeframes to the 4hr candles, focusing on the retracement back from the ATH’s to the lows seen earlier in December. The below chart shows the Fib Retracement levels. We note two main things here. Firstly, in the past couple of weeks, we’ve seen higher highs and higher lows. Secondly, the level that seems to have acted with the most resistance is the 61.8% level in the $4,400 region.

Therefore, in coming weeks, we see $4,400 as the key level to watch and see if we can get a sustained break that holds above this level. Turning lower, the bottom at $3,650 is the first point of call. Below this (and below the 100 DMA), would open up a lot of downside to the $3,000 mark.

Source:IG

Overall, momentum lacks any real drive currently for ETH. We’d argue that as long as the 100 DMA holds, the next move is to the upside, to target $5,000. However, in the short term, we feel $4,400 needs to be taken out to support this forecast. If it doesn’t, then a break below $3,650 opens up the trapdoor to have a look at $3,000.

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