The Ethereum market rallied significantly on Wednesday to break up and away from the 200-day EMA in what is a very bullish sign. At this point, Ethereum looks as if the oversold condition is about to be rectified, and it is very likely that the market will go looking towards the $3500 level. Ultimately, that is an area that I think will cause a little bit of a headache for buyers, but it is clear that the momentum has shifted to the upside finally, in what had been a very oversold market.
It is worth noting that the 61.8% Fibonacci retracement level offered support just below the psychologically important $3000 level, so the bounce makes sense. Whether or not we can recapture the highs is a completely different argument, but with Ethereum 2.0 coming within the next year, it is difficult to bet against its currency for any significant amount of time. Now that we have had our freakout based upon the Federal Reserve, it is possible that people are starting to look towards the future again, which of course is very good for Ethereum.
With the technical bounce that we have seen, it will be interesting to see if we can continue to climb rather rapidly, because that is what crypto typically does: it sells off quite drastically, consolidates for a minute, and then continues to go higher. I see nothing on this chart that tells me we are going to see anything different in the short term. Whether or not we can reach those highs again will probably have a lot to do with risk appetite in general, and not just what is going on with Ethereum. Unfortunately, Ethereum is still very much tied to what is going on with Bitcoin and general risk appetite overall. Because of this, it is very difficult to go “all in” at the moment, but clearly this is an area that I think the buyers are going to defend, as $3000 was almost a 35% pullback or so from the highs. There is nothing going on in the Ethereum space that would justify that type of move, and crypto is more likely than not going to continue to grind higher, not just Ethereum.
