Ethereum, ETH, has enjoyed a relatively bullish week this week as the market trades 7.95% higher than that of 7 trading days ago. Ethereum is currently trading hands at a value of $466.86, at the time of writing.
Developed by Vitalik Buterin, Ethereum was created to become a decentralised platform for decentralised apps (dapps) to run upon. The crypto community has taken very kindly to Ethereum with many of the top 50 ranked market cap coins choosing to use Ethereum as their blockchain, insuring their coins as ERC-20 tokens on the Ethereum network.
Ethereum has recently come under fire when a decentralised application known as CryptoKitties blocked up the Ethereum blockchain, at one point creating backlogs for days. Some of the ERC-20 token projects originally issued on the Ethereum blockchain have recently migrated away to their own blockchains, boasting superior transaction speeds into the thousands of transactions per second, far above the 25 transactions per second that Ethereum can currently handle. However, Vitalik has recently addressed potentially upgrades to the Ethereum network that would allow for more transactions per second.
The crypto giant is currently ranked 2nd in terms of overall market cap across the entire industry, with a total market cap value of $46.92 billion, at the time of writing. This is $14.47 billion below the market cap high of $61.39 billion seen 30 days ago on June 7th as indicated by the graph below.
Let us continue to analyse price action over the course of the year for Ethereum.
ETH/USD – LONG TERM – DAILY CHART
Analysing price action over the long term, we can see that Ethereum had experienced a bullish run starting from a low of $275.21 on the 2nd of November 2017, extending all the way to $1424.30 experienced on the 18th of January 2018. This was a 400% price increase from low to high.
Since placing this all time high, price action depreciated until placing a yearly low at $358 on April 1st. This low correlated close to the .886 Fibonacci Retracement level priced at $412. This is a Fibonacci Retracement taken from the entire bullish run outline above.
We can see that throughout the majority of the trading year, price action has largely been contained within the boundary of a very broad, loose, symmetrical triangle. Price action has recently rebounded from the lower boundary of the symmetrical triangle. The triangle is expected to resolve itself at some point during July.
Price action has recently toward the end of June, once again, found support at the .886 Fibonacci Retracement where the market rebounded aggressively. The nearest area of resistance is located at the .786 Fibonacci Retracement level located at $527.86. If the market can break above this level then further resistance can be located at $600, close to June’s monthly high.
Alternatively, if the market rolls over once again, then immediate support can be located at the lower boundary of the descending triangle, followed by the .886 Fibonacci Retracement priced at $412.
Let us continue to analyse price action over the more recent period a little closer.
ETH/USD – SHORT TERM – DAILY CHART
Analysing price action from a closer perspective, we can see that the market had experienced a bullish run during the month of April rising from the yearly low of $358 seen on April 1st and extending to a high of $838, experienced on the 6th of May. This was a respectable price increase of 135%.
We can see that after placing this high, price action went on to fall, funding support initially at the short term .618 Fibonacci Retracement priced at $524 in May. This is a Fibonacci Retracement taken from the bullish run seen during April.
Price action continued to fall further during June, falling below the short term .786 Fibonacci Retracement priced at $461.66 to find strong support at the short term .886 Fibonacci Retracement at a price of $413.48. It is important to note that this area of support is bolstered by the long term .886 Fibonacci Retracement, marked in red, at the same area.
The recent bullish momentum during the start of the month has pushed Ethereum back above the .786 Fibonacci Retracement where it is currently resting at the support level of $461. If the bullish momentum can increase and push the market further, initial resistance comes in at the the long term .786 Fibonacci Retracement priced at $527. Further resistance beyond this level comes in at the short term .5 and .382 Fibonacci Retracements at price levels of $599 and $656 respectively.
The technical indicators are starting to lean toward the direction that favours the bullish argument. The RSI momentum indicator is currently involved with a battle at the 50 handle. The past three times that RSI tried to penetrate above the 50 handle the market failed to do so. If the bullish momentum is strong enough to break above the 50 handle, this would indicate that a bullish trend is likely to form.
To add further to this, the moving averages have started to flatten out, trading in a more sideways direction. If the 7 day EMA moving average (blue line) can cross up above the 21 day EMA moving average, this would signal a bullish crossover to the bulls within the market and the bullish pressure should start to increase.
Ethereum has had a tough month falling by a total of 23.32% over the past 30 trading days. The market cap has some significant losses to regain over the next month for investors to turn bullish again in the long term.
With Buterin stating that upgrades should be looming on the horizon for Ethereum’s network to improve the transaction speed per second, investors are likely to start buying up the market once again as these upgrades edge closer.