Ethereum (ETH) has been the talk of the crypto town recently. Miles O’Connor, crypto economic game theorist and astute student of altcoin economics, is here to break down the technical indicators that are driving its recent meteoric rise. He’s going deep deep deep into the charts. With his legislative know-how, he’s providing brushstrokes to clarify what could be shaping up next for ETH. Get a handle on what the breakout scenario would look like. Stay tuned to the resistance levels to gain actionable insights to inform intelligent trading decisions.

Decoding Ethereum's Technical Patterns

At present, an ascending triangle pattern is developing on the daily ETH/USD chart. The top limit of this triangle coincides with the peak from June. This pattern is defined by a horizontal upper-bound resistance, currently located around $2,735, and an upward-sloping support line. This formation is a sign that buyers are getting more aggressive and could be building the proper formation for a major price breakout.

The outlook is still very bullish after the quarter’s breakout from a falling wedge. This breakout then transitioned into a very tight bullish flag pattern. This bullish flag formation indicates that a breakout is likely to occur toward a long-term flag target in the $4,300–$4,500 area. Now price action is finally working itself into a confluence zone of these two very important levels. This level represents confluence with the 0.618 Fibonacci retracement level, important dynamic resistance and the upper edge of the recent value area.

In the past, when the ascending triangle pattern formed, upward breakouts have proven successful 77% of the time. Many analysts are anticipating a breakout from the current ascending triangle. That would extend the bull move that started from the April bottoms around $1,390. Only if Ethereum manages to regain the $2,535 hurdle will it pump bullish momentum. Topping $2,650 will open the door for a climb to $2,732 and test the $2,800 ceiling. Such an ascending triangle breakout could result in a move up above $3,000.

MACD and Moving Averages: Gauging Momentum

The Moving Average Convergence Divergence (MACD) is widely regarded as a powerful momentum indicator – arguably one of the most powerful indicators available. The MACD value is obtained by subtracting the 26-period Exponential Moving Average (EMA) line from the 12-period EMA line of Ethereum’s price data. First, look for buy signals when the MACD line crosses above the signal line. On the other hand, if bullish after a period of consolidation, signal to sell if it falls below.

MACD Strategies

Ethereum currently has a 1-week strong buy rating, and the technical analysis gives a strong buy signal. 200-day simple moving average is a trader favorite. It's gonna get a lot of attention on price charts. More than that, it serves as an important gauge of long-term patterns.

  • Crossovers: Look for when the MACD line crosses above or below the signal line.
  • Zero Line: Analyze which side of zero the MACD lines are.
  • Divergence: Spot divergences between the MACD and price action.

Increased use provides a natural price floor Ethereum since increasing trading volume is essential for long-term price appreciation. When trading volume is high, it’s usually a sign that investors have a lot of interest—or bearish/stout conviction—that can force more upward price appreciation. By July 2021, Ethereum had obviously outpaced all of those different cryptocurrencies. In fact, it outpaced Bitcoin (BTC) in growth and trading volume during the initial half of the year. This really emphasizes how highly correlated trading volume is with Ethereum’s performance.

Investor Confidence and Trading Volume

Investor confidence is key to sustaining any rally. Positive news, technological advancements, and growing adoption can all boost investor sentiment, leading to increased buying pressure and higher prices. Miles O’Connor understands that Ethereum requires the right combination of technical fortitude and investor faith. This combination is key for Ethereum to fulfill its bullish promise.

An analyst believes that $3,500 is an important resistance zone for Ethereum. If this resistance level breaks, Ethereum may have already shot over this threshold. The comic disregard for reach resistance levels for Ethereum. It does provide a framework for estimating those limits at the very least. This can help traders be more aware of such factors. This knowledge prevents them from making emotional decisions and missing out on the chance to benefit from Ethereum’s bullish trend.

One analyst predicts that $3,500 is a key resistance level that, if broken, could see Ethereum rise above this price. While the provided context does not give specific resistance levels for Ethereum, it provides a general method for calculating resistance levels. By keeping an eye on these factors, traders can make more informed decisions and potentially capitalize on Ethereum's upward momentum.