The bull rally continues as Ethereum manages to break the historical trendline resistance that dates back to December 2017. Volume and momentum oscillators suggest that the break is clean and the market has enough steam to push price higher.
Looking at the chart above, there was a beautiful price consolidation along the historical trendline which was the first clue that things could break. Most of the times I notice traps are set when price breaks a trendline too quickly and comes back down, we notice here that price hovered around the line for nearly 2 days before gaining enough momentum to move higher.
An increase in volume and an RSI holding support at the 50 line was another indicator that the uptrend was going to continue past the trendline. Also notice how price never broke the 13 or 21 EMA as it consolidated around the 200 EMA.
The significance of this trendline should not be underestimated, it suggests this ETH uptrend could be larger than anticipated. We can see that the trendline was originally formed back in December of 2017 and the last time we’ve seen any kind of clean break was back in February and May of this year.
So where do we go from here? We aren’t quite out of the woods yet.
We are approaching the 55 EMA on the daily chart. If we are to remain in a healthy downtrend (as we are technically still in a bear market), we could easily bounce off the 55, which is around $141 at this time.
The daily 55 EMA as of now also has confluence with a horizontal resistance from July 2017. It’s probable that we get a reaction at this level, but just like with trendline resistance, we will need to wait to see.
From here I’d like to see price to close above the Daily 55 EMA (yellow). A close above $140 could send us to the $220 range. While I fully believe we can get here, I think we could see a fairly strong pullback after approaching the $140 range.
The Daily RSI has is reaching levels not seen since April/May 2018 during the surge from $372 to $810, which also started after price bounced off the same historical trendline in early April. At the time of writing the Daily RSI is at 80 with historical extremes reaching 96.
The MACD indicator is also reaching extreme levels not seen since the Spring of 2018. Both of these conditions suggest a pullback could be in order soon.