After Epic Move Higher, Ethereum Looks To Consolidate

Since breaking out through the $2,500 level, cryptocurrency Ethereum ETH/USD has made an epic move higher. It has gained about 40% in just two weeks.

But there’s a good chance there is a pause to the rally and a period of consolidation or sideways trading. It has become very overbought.

This refers to its momentum. When securities reach extreme levels above what would be their typical trading ranges, they're considered to be overbought. There is a good chance they revert back to the average.

The bottom part of the following chart is a momentum measurement indicator. As you can see, the last time ETH was as overbought as it is now was in January. A one-month period of sideways trading of consolidation followed.

Of course, there’s no guarantee this happens again, but the overbought conditions could put a temporary halt on the rally.

Posted In: CryptocurrencyTechnicalsMarketsTrading Ideas
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