On Dec 7, the price made a low of $83.00. A sharp upward move was followed by a gradual increase. The increase intensified on Feb 8.
Tracing the lows during this period gives us an ascending resistance line.
On Dec 24, the price reached a high of $163.5. A gradual decrease followed.
The price reached the same level several times. Tracing these highs gives us a horizontal resistance line.
Ethereum’s support and resistance lines combine to create an ascending triangle:
This is a bullish pattern. It theoretically indicates that price increases are more likely than decreases as long as Ethereum is trading within the pattern.
Will the price eventually break out from this pattern? Let’s find out.
On Mar 27, the price moved past the 50- and 100-day moving averages (green & black).
Furthermore, the 50-day MA crossed above the 100-day MA. This is known as a bullish cross and may indicate that a new uptrend has begun.
At the time of writing, Ethereum’s price had reached the 200-day MA. However, it had not yet broken past it.
Therefore, while we believe a break out possible, Ethereum must first clear the resistance created by the 200-day MA.
Furthermore, Ethereum’s volume shows has been decreasing since the creation of the triangle. This is a common occurrence in triangle patterns since they involve a long period of consolidation.
If volume increases rapidly, a breakout becomes more likely. For example, on Apr 2, Bitcoin experienced a rapid increase in volume.
This correlated with a breakout above the resistance. Ethereum subsuquently spiked to over $5000:
The point of convergence between resistance and support is the absolute latest time in which this breakout can occur. Convergence is projected for June 16. This means that Ethereum still has over two months to break through the resistance.
If the price of Ethereum follows a similar pattern, the breakout should occur during mid-April.
As seen from the graph, the green arrow is the height of the triangle:
Following a breakout, we believe Ethereum might reach as high as $250.
Judging by the length and height of the triangle, we also believe that Ethereum will trade between $160 and $250 throughout April.
Lastly, we believe it is possible that the price will drop to touch the resistance line. If so, this may be validated as support in the future. This may occur prior to another upward move.
Do you think the price of ETH will eventually breakout? When will that happen? Let us know your thoughts in the comments below!
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
