Technical Analysis and Market Entry: Ethereum (ETH/USD) on a Launch Pad for Another Potential Rocket Higher

  • The Ethereum price, for now, continues to move within consolidation mode following the big moves of May-June.
  • ETH/USD price action is at present sitting on a potential launch pad for further strong moves north.

ETH/USD: Recent Price Behavior

Ethereum’s price is moving within a consolidation period, as the bulls continue to take a breather ahead of further upside pressure. Over the last seven sessions, price action has been very much choppy following a strong move higher between May-June. ETH advanced some 145%, rallying from $147 up to a high late June at $363 – a level that has not been seen 6 August.

ETH/USD had formed a bullish flag formation during this recent push north; an aggressive breakout came into play on 21 June, jumping to the noted high. Technically it is understandable to see a cooling after such a bold move higher. The easing south allowed for ETH to retest the flag formation, completing the textbook breakout and retest.

ETH/USD daily chart.

Ethereum Remains Popular with DApp Developers

Ethereum is still the leader in decentralized applications (DApps), according to the latest quarterly data. The total number of DApps on the Ethereum network were reported at 1,633, well ahead of competitors EOS (435) and Tron (412).

However, the Ethereum network continues to lose when it comes to active users versus Tron. Ethereum has 365,112 versus Tron’s reported 445,054. Additionally, transactional volume was largely dwarfed by EOS and Tron; 189.79 million (EOS) and 89.58 million (TRX), with Ethereum reported at 6.04 million. The domination on this side of things is due to EOS and Tron’s gaming and gambling-based DApps.

Trade Recommendation

ETH/USD remains attractive for further upside; entry opportunities present themselves within a zone from the $280-$270 price range. It is seen just above the breached bullish flag structure, which the bulls managed to smash out from towards late June. As the price consolidates just above the noted pattern, the retesting is being held comfortably by the demand area. There are little signs of breakage from the bears with this near-term comfort.

Entry opportunities are seen in and around the described price support, as long as a daily closure is not forced below the $280-$270 territory. As can be observed via the daily chart view, the price is consolidating around an area seen in August 2018. It marks some significance, as is acted as support during a bear market, but now ETH is moving within a bullish trend.

In terms of upside targets; $350, $400 and then $500 are achievable, so long as the structure holds firm. If measuring the pole of the flag, this equates to some $120, which in theory means ETH/USD should still complete that move higher. Stops would be placed at $250, leaving enough breathing room in case of sharp short-lived spikes south.

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.