Technical Analysis and Market Entry: ETH/USD Bulls Make A Critical Break of Bearish Market Structure

  • Ethereum bulls come to life with substantial double-digit gains, setting up for further recovery.
  • ETH/USD price action has broken a market structure of lower highs and lower lows.

ETH/USD: Recent Price Behaviour

Ethereum bulls gather tremendous upside momentum, gaining big double-digits in the session of 14 January. It was the biggest gain in a day since 25 October 2019, advancing a whopping 18%. The price rallied from $144 up to $171, the highest that was last observed some three weeks ago, on 21 November.

The break is somewhat encouraging, despite that rallies have been vulnerable to being sold, something that is currently the norm. However, ETH/USD price action had been moving within a bearish flag, from 18 December up to 5 January. A successful breakout and retest of this structure were observed, between 6 – 10 January.

It effectively invalidated the flag, something of which the bears should have typically been capitalized on. ETH/USD underwent a period of consolidation seen between 11-13 January. The price was narrowing just above the breached flag, as the bulls were gearing up for an extended move higher. Buyers had used this area as a launchpad for a further advance, as described for 14 January and the double-digit gains.

ETH/USD daily chart.

Critical Market Structure Broken

The Ethereum price for the first half of 2019 was enjoying a decent recovery, having rallied some 250% from $100 up to $360. After ETH/USD peaked up at the highest levels seen since August 2018, a massive bear market came into play. The price has been stuck within a downward trend since having dropped as much as 60%.

Given the detailed trend south, market structure has been producing lower highs and lower lows. Each high seen was sold by the bears in a timely fashion, as upside proved to unsustainable. The most recent lower high was at the back-end of November, hitting $152, before resuming pressure to the downside.

A critical development to note is that this most recent rally seen on 14 January, has forced a break of the above-detailed market structure. The noted high was broken down by the bulls, as stated the high print of that session was at $171, versus the November high of $152. It does now technically give the bulls room for further recovery.

Trade Recommendation

Buying opportunities are appearing to be attractive, given the most recent price developments. In terms of entries, eyes will firstly be on if a retest can be seen of the previous high area at $152. A successful retest and hold here via the daily would be an encouraging point of entry.

Should this price not come back to this level, then another area of interest would be upon a breakout and retest of daily resistance at $172. The noted is also the upper part of a demand zone. Targets would be; $200, $220 and then $250. Stops with the first detailed entry at $135, then second $150.

Disclaimer: The author 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.

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.