Hi friends! Welcome to this update analysis on Ethereum! Let's get right to it. Looking at the four hour chart, you can see that ETH has found support on the 50% retrace, and is now breaking above the 50 EMA (in orange) and heading up to test the blue downtrend resistance line, that originates on the all time high. If you look carefully, you can see that this pattern is similar to many of the other inverse head and shoulders patterns that we're seeing in the market. However, the peak that could have created the right shoulder, never actually made it to the neckline. Instead it was stopped at the 38.2% retrace, before heading lower to for the trough that would have otherwise been the right shoulder. So this isn't exactly an inverse head and shoulders pattern, but it corresponds with the time-frame, and general look of many of the other inverse head and shoulders patterns in the market. Therefore, the technical implications of this formation may be similar.
It is noteworthy to point out the severe negative slope of the falling resistance level (in blue.) I'm going to actually think of it as a neckline, even though it is a big downtrend channel , because I know that it is basically the same pattern that exists in other assets. With that said, if this were a neckline, it would not be as bullish as a neckline with an increasing slope, like the one seen in LTC for example. Regardless, the overall pattern looks like it is ready to test, and potentially breakout above the blue trendline . You can see that the 200 EMA is right around the blue trendline , so that could increase the resistance in that level. However, if ETH breaks above it, it will have surpassed two major levels at once.
The heavy resistance at the 50% retrace is going to be a very important level for ETH. If Ethereum confirms above that level, it will be majorly bullish , and it would be a technical indication of an eventual retest of the all time high. For now, let's pay close attention to the blue trendline . Look for a strong breakout on high volume.
