Taking a quick look at ETH this afternoon as the pair retests range highs. Will the resistance finally break?
ETH Upside Consolidation Break?
ETH/USD bulls have had a good run over the last month, seeing a rally from $1800 to around $3300, likely on anticipation and reaction to the London Hard Fork on August 5th, as well as a broad bullish reaction in the crypto markets to news in July that a couple of the world’s largest crypto exchanges will reduce leverage limits.
But for most of August, Ether has been in a sideways pattern, indicating that the London Hard Fork may be fully priced in and possibly on the lack of fresh major catalysts over the past could of weeks.
But in today’s session, we’re starting to see the market break above the major resistance area around the $3300 handle, possible with the help of a recent run of crypto-friendly headlines (e.g., PayPal launches its cryptocurrency service in the UK, Visa buys a CryptoPunk as it takes first steps into ‘NFT commerce’).
That NFT purchase by Visa is a particularly interesting event as it could accelerate interest in Non-Fungible Tokens, which mainly operate on the Ethereum network.
With the Ethereum network now burning Ether at a high rate, and a high probability that the Ethereum Network (and crypto in general) will likely continue to see further adoption, the odds are pretty good that the small break resistance break in ETH/USD could draw in both technical and fundamental buyers if the market is able to hold above $3300.
Now, with stochastic and price signaling a potential bearish divergence setup, it’s possible we may see one more technical dip in ETH/USD in the short-term, especially if broad risk sentiment swings back to negative (likely on negative covid-19 developments).
But if we continue to see positive headlines like from the U.S. & China today (US FDA approves first Covid-19 vaccine, China reports no new local Covid-19 cases for first time since July, as Delta outbreak wanes), the odds remain pretty low of a fakeout, or at least a sustained drop in price without any negative surprise news events from the crypto, economic and/or monetary policy fronts.
What do you all think? Is this a legit upside break or will there be a fakeout and dip ahead? Let me know in the comments section below!