Ethereum Correction Before Bullish Trend
Ethereum (ETH) will experience a strong resistance ahead of it. And it has some indicators telling that ETH will correct before its further bullish trend.
After a six-month-long correction, Ethereum reached a bottom of $117 in mid-December 2019. After that, the smart contracts leader has seen its price boost by almost 100%. It hits a yearly high of $230. ETH seems to be testing a significant resistance level that might hinder from advancing further.
Based on IntoTheBlock, a machine learning and statistics modeling company, the $227 price level means a major barrier for Ethereum. According to the firm’s In-Out of the Money Around Current Price (IOMAP) model, there are more than 506,000 addresses. Moreover, they collectively hold 3.67 million Ether between $224 and $231. Also, ETH might fail to break through on its initial pass at this price level, given the high levels of supply.
In addition to that, the IOMAP highlighted a rejection off the $227 resistance level. As a result, it will trigger a correction to the next significant support, sitting between $209 and $216. At this price level, more than 838,000 addresses are containing 4.02 million Ether.
Following Ethereum’s rally, a pullback from the recent price levels looks reasonable. This is because it would help in maintaining the uptrend healthy. Then, sidelined investors might see such a bearish impulse as a chance to go back into the market. A fresh inflow of capital will take Ethereum back up to retest the $227 resistance level again.
Additionally, if the buying pressure is strong, it may finally let it break through the $227 mark. Going over this hurdle could take the cryptocurrency to the next level – a resistance between $231 and $238. It will have 265,000 addresses, with balances summing above 1.04 million ETH.
Technical Patterns of ETH
Moreover, an identical scenario on the one presented by IntoTheBlock is visible on ETH’s 1-day chart. Between the timeframe, the TD sequential indicator showed two sell signals. The first one is in the form of an aggressive 13 and the other as a sequential 13. The bearish information suggests that the uptrend might soon hit an exhaustion point. Then, it will ignite a one to four candlestick correction or the start of a new downtrend countdown.
Still, Ethereum is currently on a green seven candlestick based on this technical index. So, this crypto could see two more green candlesticks ahead of a sell signal presented in the form of a green nine candle.
Aside from that, a spike in the selling pressure behind Ethereum in the recent price levels might validate the sell signals presented by the TD sequential indicator. If this occurs, Ether may drop to the 78.6% Fibonacci retracement level at $206. Now, this is where IntoTheBlock sees a significant support level. However, breaking under that mark will likely trigger a steeper correction.
The 61.8% and the 50% Fibonacci retracement level will give the following levels of support. Then, these hurdles stand at $187 and $174, respectively.
Also, investors seem to be buying every swing low. Therefore, despite the bearish signs, they can’t void the bullish outlook. And if Ethereum could break above the recent high of $230, the next level of resistance will be from the 127.2% Fibonacci retracement level, sitting at $261.
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