Ethereum (ETH) has followed Bitcoin (BTC) through the latter’s paces during 2020’s nascent uptrend, and heavily outperformed it the whole way to the tune of roughly 50% at time of writing. And as last week’s candle closed yesterday, we see an interesting divergence on the two most important ETH charts: on one, we can confirm an HTF uptrend, whereas on the other we’re (maybe) not quite there yet.
We start with the weekly ETH/Dollar chart, and must first acknowledge what is likely to be an important level on this chart. This level, at $306 dollars, is formed with the tops of four weekly candles from June-July, and we see that Ethereum began to sell off when approaching this level.
This is the area that ETH must retake to secure a final confirmation of an ETH/Dollar uptrend, although it is likely already within one. It is the case because this level marks a higher high within the HTF structure.
If we contrast this with the ETH/Bitcoin chart, we will see that an HTF uptrend more clearly obtains there. This is because of the very important retaking of the 2019 ‘Capitulation line’, which marked the spot when Ethereum fell back into price territory not seen since 2017 (specifically, ₿0.0231).
This chart shows a clear higher high off of a double bottom, along with a retaking of all the typical EMAs. (One counter-argument here is that the EMA fan is not fully bullish on this chart, whereas it is on the ETH/Dollar chart.)
Even so, the weekly indicators on ETH/Dollar are exceptional, with Ethereum far above the bull zone on the RSI, and a flat trajectory up holding throughout the week last week.
In the medium term (MTF), we are likely to see a retracement. Ethereum went up ‘too far, too fast’, and this momentum could hardly be sustained on the daily chart for too long.
However, we must also acknowledge how strong the ETH/Dollar daily still looks strong even amid an atmosphere of correction. Throughout the Jan-Feb runup, we saw buy volume mostly building into the surge, not selling out of strength. We also note that no bear divergence ever showed up on the daily RSI.
We may end up seeing a trading range that corresponds to the May-June 2019 range, and we have already seen buyers flood in to hold Ethereum at that support level, which level is also confluent with the .382 Fibonacci level. In this case, we could see more of a consolidation than a downtrend; If not, we could see a longer MTF downtrend.
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