Can the price of Ethereum reach $ 4K after a triple-support jump?

Ethereum’s native token Ether (ETH) seems ready to continue its ongoing rebound movement to $ 4,000, according to a technical setup shared by independent market analyst Wolf.

Classic bullish reversal pattern in the works?

The pseudonymous chart analyst discussed the role of at least three support levels to push the ETH price up by almost 30% of its $ 2,160 local floor. These price levels included a 21-month exponential moving average (EMA), the 0.786 Fib level of a Fibonacci retracement chart ranging from $ 1,716-swing low to $ 4,772-swing high and the lower limit of an upward triangle pattern.

ETH / USD daily price chart with the three supports. Source: TradingView

Wolf noted that the triple-support scenario could push Ether price to $ 3,330. In addition, the combination would activate a classic bullish reversal setup, called Reverse Head-and-Shoulder (IH&S).

In detail, the IH&S pattern Ether could have formed three successive troughs, with the middle trough (the head) deeper than the other two (the left and right shoulders). Meanwhile, all the troughs on the head will hang below a common resistance trend line, called the neckline.

In a “perfect” scenario, a break above the IH&S neckline could push the Ether price as high as the maximum distance between the neckline and the head. That sets the ETH price en route to $ 4,000.

ETH / USD daily price chart with IH&S setup. Source: Wolf, TradingView

But if ETH is rejected in the run-up to $ 3,000, it would mean a pullback to the emerging triangle support.

ETH bulbs are not out of the woods

As Cointelegraph discussed earlier this week, Ether’s continued price rebound comes as part of a broader correction that began after ETH reached its record high above $ 4,850 in November 2021. 30% upwards to reach its current price levels.

The retracement could emerge as a temporary break in Ether’s overall downtrend. As a result, the price could fall even lower, according to a “bear flag” setup shown in the attached chart below, with a target down at $ 2,000.

ETH / USD daily price chart with ‘bear flag’ pattern. Source: TradingView

Several indicators on the chain agree with the bearish outlook. For example, Glassnode data show that the Ethereum balance on all exchanges has increased since the beginning of December 2021, coinciding with the price declines of the ETH.

Ethereum balance on all crypto exchanges. Source: Glassnode

An increasing number of ETHs held by exchanges increases the chance that traders will sell them for other assets. Notably, a year-long decline in the number of ETH in the exchanges’ reserves coincided with the Ether rally from $ 730 to more than $ 4,800.

Ethereum Whales Vs. fishes

More disadvantages to the Ethereum token come from a clear absence of influential buyers in the market. For example, some of Glassnode’s metrics show that the number of Ether slugs holding more than 100 ETH and less than 1,000 ETH has been steadily declining since the beginning of 2021.

Ethereum Number of addresses with a balance of at least 100 ETH. Source: Glassnode

Ether is also not immune to the ongoing macroeconomic trends. For example, its recent price decline appeared primarily in the wake of the Federal Reserve’s plans to accelerate the withdrawal of its $ 120 billion-a-month COVID-19 stimulus program by March 2022, followed by at least three rate hikes.

The US Federal Reserve’s growing plans have whetted investors’ appetite for risky assets, volatile tech stocks, gold and cryptocurrencies. As a result, the fundamental outlook for Ethereum risks becoming extremely bearish.

Related: Altcoins rack up 30% profit as Bitcoin price chases to $ 39,000

Nevertheless, retail investors look unfazed by the macroeconomic developments. On feb. 1, the number of ETH addresses with a non-zero balance reached a new record high of more than 74,137 million. Last week, the total amount of wallets with at least 1 ETH had also reached close to 1,414 million.

Ethereum Number of addresses with a balance of at least 1 ETH. Source: Glassnode

Ethereum addresses with a balance of at least 10,000 ETH – the real whales – also show a slight improvement. In detail, their numbers increased from 1,157 to 1,163 during the January 2022 price correction, indicating that the richest wallet holders bought the dip.

Lighting will return

According to Nick, a market analyst at Ecoinometrics, the cryptocurrency market is still in a “dangerous zone” due to the hawkish turn of the Fed. But there is still hope that the central bank would switch to quantitative easing again if the stock market falls by another 15% -20%.

“It is when there is blood on the streets that you can find good opportunities to make money,” Nick wrote in the latest analysis, adding;

“Whether there are some risks of more downsides or just a longer period of weak price action until the Fed returns to its senses, now is probably a good time to build a position and wait for the real pump to start. “

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you have to do your own research when making a decision.


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