Ethereum Provides Potential Trade For Bulls; Bears Dependent On Which Key Pattern Plays Out
Ethereum (CRYPTO: ETH) was trading about 2% higher on Friday in a continued bounce of relief since plummeting almost 24% lower between Jan. 5 and Jan. 12 when the crypto hit a low of $2,928.69.
The cryptocurrency sector has been in a long-term downtrend since Nov. 10 when Ethereum and Bitcoin (CRYPTO: BTC) hit all-time highs of $4,867,81 and $69,000, respectively, which indicates the bears are currently in control of the apex cryptocurrencies.
In The News: On Thursday, Ethereum co-creator Vitalik Buterin asked his 3.1 million Twitter followers: "Poll for Ethereum community. You wake up in 2035, and 80% of all transactions + savings in the world are in one currency that is not ETH. Which would you prefer it to be?"
Although the year 2035 is far off in the distance, Ethereum competitors have advanced in their race to dominate the recently new NFT and DeFi spaces that it currently controls: Ethereum is holding 147.5 billion of total value locked or 62.06% in terms of DeFi and hosting some of the most popular and valuable NFT projects such as CryptoPunks, Art Blocks, Bored Ape Yacht Club and Mutant Ape Yacht Club.
Ethereum is trading within two patterns, which may reward either the bulls or the bears, depending on which pattern plays out over the coming trading days. The patterns may also make both sets of traders nervous to enter a position until technical analysis can determine which pattern will be recognized.
The Ethereum Chart: Bullish traders can take note that Ethereum has reversed into an uptrend making a consistent series of higher highs and higher lows on the daily chart. The most recent higher low was printed on Friday at $3,188.34 and the most recent higher high was created on Wednesday at $3,420.08.
- For the uptrend to be negated, Ethereum will need to close a 24-hour trading session below the most recent higher low.
- Bearish traders may be looking for the potential bear flag to be recognized, with the pole created between Jan. 5 and Jan. 8 and the flag formed over the days that have followed. If the bear flag pattern is recognized, the measured move is 21% and when subtracted from the highest price in the flag it indicates Ethereum could drop toward the $2,680 mark.
- For the bear flag to be negated, Ethereum will need to rise up above the eight-day exponential moving average, which will also cause the crypto to print a higher high.
- The daily volume on Ethereum, which is coming in on Friday at well below average, indicates the crypto is in a period of consolidation and gives no hint toward which pattern will play out.
- There is resistance above at $3,415.52 and $3,610.91 and support below at $3,240.01 and $3,057.82.
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