Crypto Price Analysis: Ethereum Bulls Flexing Muscles

On our December 05, 2018 Ethereum (ETH/BTC) update we asserted that whales saw the price drop to around 0.024 – 0.028 as an opportunity to accumulate positions in bulk. We also argued that the buying at that level would spark a rally that will take the market above 0.0375. Even back then we were convinced that Ethereum has started to bottom out. We got our confirmation as soon as Ethereum rallied past 0.0375 and climbed as high as 0.041752 on January 5, 2019.

Almost two months later, we are now seeing signs that the market is shifting from accumulation to markup. In this article, we reveal how Ethereum bulls are flexing their muscles.  

Bullish Monthly Candle  

The February 2019 candle closed in favor of the bulls for two reasons. The first and more important reason is the establishment of a bullish higher low of 0.029865. For the second consecutive month, Ethereum has refused to revisit lows of 0.02463. The market is sending a clear message to its participants: those who want to get in will have to buy higher. This is how bull markets are born.

Ethereum monthly chart

The second reason is that the monthly close of 0.035485 brought Ethereum way above the current range midpoint of 0.031114. What this means is that momentum is on the side of the bulls. They are currently in position to touch the range high of 0.0418 once more. If they do, we won’t be surprised if they finally take it out.

Volume Coming to Life

Back when Ethereum made its 2018 high of 0.123799 on February 1, 2018, the 3 day trading volume barely made it above 550,000 ETH units in those days. From that point, the market entered bear territory and volume rarely made it past the 550,000 mark on the 3 day chart. These are classic distribution signals.

That changed in September 2018. Volume suddenly spiked as Ethereum plunged below 0.0418. Volume stayed elevated as the market traded between 0.0246 and 0.0418. This was a clear signal that participants are heavily buying at current prices.

Ethereum 3-day chart

In technical analysis, volume precedes price. Thus if volume is on the up and up, we can form the expectation that price will pump soon.

Golden Cross on the Daily

Just recently, the 50-day moving average crossed above the 200-day moving average. The crossover is so fresh that it looks like the two moving averages are entangled. Nevertheless, the cross between the two indicators is one of the best buy signals that you can get if you’re a long-term investor. By definition, a golden cross indicates that a bull market is most likely on the horizon especially if it is supported by heavy volume.  

With this golden cross, the likelihood of breaching range high of 0.0418 has increased.

Ethereum daily chart

In addition to the golden cross, we can also see that the 100-day moving average is gliding below the price. We now have a bullish alignment where the 50-day MA, 100-day MA, and 200-day MA are acting as additional supports. Think of them as a three-layered escalator that will help push the price up gradually.

Bottom Line

While Ethereum is still range bound, bulls are starting to show signals that they’re almost ready to take the market to the next level. The bullish monthly candle, elevated volume, and golden cross on the daily chart indicate that Ethereum bulls are flexing their muscles. If our read is correct, the market might blow through our range high of 0.0418 and climb as high as 0.047 this month.

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.