Ethereum, after being aggressively sold for months, selling pressure seems to be halted at this stage. The pressure of the bear market and a panic selling by the ICOs has pushed Ethereum to the low of $80 which is significant given Ether achieved an ATH of $1594.89 on 8th Jan 2018.
Coming back to the present, even though Ether produced an approximately 100% bounce from $80.56 to $159.20 on Kraken, the surge is largely due to a combination of fundamental and technical reasons such as the upcoming Constantinople Hard Fork on 16 Jan 2016, short covering and an overdue bounce. I am not of the opinion that Ethereum is poised for a trend reversal yet. The selling is likely to be resumed immediately after the fork.
Let’s dive into the technical side of the analysis:
After the 100% rally within 3 weeks from $80 to $160, Ether is trending at $150 at the time of writing this analysis. It can go higher but it does not have any potential left unless it breaks above the red order block in the above chart spanning $166-190. This area is highly unlikely to be surpassed at this stage because if it does, it could signal a trend reversal and a potential end of the downtrend, but the overall market sentiment is not supportive of a reversal yet. I have highlighted $250 as next strong resistance, just in case.
The price is printing a bearish divergence with RSI on D1 TF since price made a higher high, but the RSI failed to do so. MACD is quite neutral. There could be a last sharp move up to $165 before it starts going down again. This is not a time to buy because historically, an asset drops sharply after the fork is over. The fork is just 12 days away and Ether is already up 100% and close to a major resistance level. BTC being the market leader is still in the downtrend which makes a coming drop in price more likely than otherwise.
I have highlighted the following support and resistance levels for Ether in the following chart on a W1 TF:
Resistance Levels
$166-190 Strong Resistance
250 Strong Resistance
Support Levels
$130 Interim Support
$115 Interim Support
$80-90 Strong Support
$40-50 Strong Support in case $80 does not hold
$7-15 Support Level if $40 does not hold
This analysis will serve well until a confirmed trend reversal. I will update only if there are any changes in scenarios.
