Ethereum (ETH) Likely To Trade Sideways Before Its Next Decisive Move
Ethereum (ETH) has rallied aggressively the past few days on news regarding its Constantinople upgrade. The market seems to unanimously believe that the upcoming upgrade is going to result in a major price boost for ETH/USD. This may be true but the recent reaction to the news has been more of an overreaction and the price has now reached a point where it has to make way for a minor correction to the downside. As the 4H chart for ETH/USD shows, the price has already bounced back towards the bottom of the ascending channel after running into the 61.8% Fibonacci retracement level. Previously, the 38.2% Fibonacci retracement level served as an important support which the price strongly defended.
RSI for the above chart also shows that the price has now ample room to retrace and afterwards continue to trade sideways. This sideways movement will give Ethereum (ETH) time to think whether it is supposed to break past the 61.8% Fib resistance or is it supposed to break below the ascending channel to complete the bullish gartley pattern. The more likely scenario is that Ethereum (ETH) will retrace to find enough bullish momentum to break past the 61.8% Fib resistance. This will pave the way for a rally past $200 in the weeks that follow. That being said, Ethereum (ETH) is likely to retest the previous market structure during its upcoming rally which will now serve as a strong resistance. This would see the price fall back towards $83 but it is extremely unlikely to fall below it.
Chart for ETH/BTC (1W)
Ethereum (ETH) like most other coins has already completed its correction. The capitulation phase is over as well and the bear market of 2018 is going to come to an end in the next few weeks. After that, the price is not going to continue to decline further but it is going to find the strength to rise. Imagine the large number of people who are currently holding at big losses. The majority comprises of first time investors who don’t understand market cycles have already given up and they would be happy to just break even. This is nothing new, it happens in every market after a bear trend. So, soon as the price reaches the levels they bought it, they are going to sell. This is the reason the price is going to trade sideways for a long time now.
So, one might ask, “If all of these people are trying to breakeven, how is the price going to rise?” Well, the next few months are about accumulation. This means that the smart money is going to buy from the weak hands. Every time an investor holding at a loss sells just before the beginning of a bull market, smart money is more than happy to accumulate. The reason we are not going to see a rally anytime soon is because there are too many of such investors who are looking to break even. Smart money knows this which is why it keeps buying all the weak hands. When the weak hands have been fully bought out, new investors start getting into the market and the price begins to rally.
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