As predicted in the previous article, ETH continued its upturn and toppled its long-term liquidity range (Point of Control/POC) and the 200 EMA (green) over the past two days.
Now, ETH was aiming for a possible test of its POC before continuing its rally. As the price broke through its 200 EMA, the bulls would continue to increase the buying pressure to break the resistance at $3,300 in the days ahead. At press time, ETH was trading at $3,337.8, up 6.5% in the past 24 hours.
ETH Daily Chart
Since losing its liquidity range at the $3,100-mark, the king alt saw major sell-offs on high volumes. Thus, ETH poked its six-month low on 24 January.
After conforming to its historical trends, ETH recovered from the support of the 13-month trendline. (yellow, dotted). After testing this level several times, the bulls have finally powered a strong rally over the past two weeks. Consequently, the alt saw an expected descending wedge break (yellow) on its daily chart.
During this recovery, the alt saw an over 34.3% ROI in the last 14 days while forming a rising wedge (white, reversal pattern). As a result, the price approached the upper band of the Bollinger bands (BB). Thus, from here, a likely near-term setback should not surprise the investors/traders. Following this, it would likely continue its uptrend as it broke above the POC and the 200 EMA.
Reasoning
The RSI mostly matched the price while marking growth in an ascending wedge. Since entering the overbought region, a potential drop from here could trigger a schematic breakdown and thus lead to a test of the 57-61 support range.
Also, the CMF reaffirmed the increasing money flows into the crypto as it managed to keep a foothold above the zero-line. However, the ADX displayed a slightly weak directional trend for ETH.
Conclusion
Given the overbought readings on the RSI and BB with the rising wedge pattern, a short-term setback could find a cushion near its POC. With the 20 EMA crossing the 50 EMA, the bulls have taken the driver’s seat and would now try to topple the $3,300 resistance.
Besides, investors/traders need to closely watch out for Bitcoin’s movement as ETH shares an astounding 96% 30-day correlation with the king coin.
