Ethereum Price Analysis: Latest Forecast Shows False ETH Breakout
Since Ethereum has been surging over the last few hours, let’s go ahead and check out its price action to see what may be next for investors.
Ethereum Price Analysis
The first thing that we can observe on the price chart for Ethereum on the daily resolution is that the EMA-200 (purple line) is looming directly overhead to serve as a resistance for further price action.
This is something that traders should definitely note.
Potential Ascending Triangle Formation
Many (including the author) have noticed what appears to be the makings of an ascending triangle (flat-top triangle). These are bullish continuation/reversal patterns that often lead to major gains.
In fact, it is the fulfillment of this pattern that led to Bitcoin’s massive gains.
Let’s briefly review below what an ascending triangle (flat-top) pattern formation looks like and how it works:
Let’s see how Ethereum matches up with this chart formation on the daily resolution:
From what we can see above, the current price action for Ethereum does have all of the trappings of a flat-top triangle.
Let’s go to the current price action (down to the candle) to see if the current day’s price action reflects a true breakout:
At first glance, it does. However, what is seen above should not be considered to be a true breakout.
When Volume Does Not Match Breakout, it is a ‘False Breakout’
Notice the lack of volume to accompany this move. That’s one of the classic signs of a false breakout.
Relative Strength Index [RSI(14)]
RSI = overbought, but that does not necessarily mean that the party is over.
However, given the current volume for $ETH, resulting in a false breakout plus the strong overhead resistance that will undoubtedly be posed by the EMA-200 on the daily resolution, the author is currently a bit more bearish on Ethereum than the general crypto audience.
Without creating too lengthy of an exposition, we’re going to go ahead and opt for a short position on this trade, using the EMA-50 value on the H4 resolution as our guide here.