Technical Analysis and Market Entry: Etheruem (ETH/USD) – Bullish Flag Subject to Explosive Breakout

Ethereum Classic
  • The Ethereum (ETH) price recovery has proven to be sustainable this year, with further moves north still eyed.
  • ETH/USD via the daily chart view is moving within a bullish flag pattern formation.

ETH/USD: Recent Price Behavior

The Ethereum price is showing encouraging qualities each day for the bulls, despite the generally range-bound nature of trading at present. Price action over the last three weeks has been moving within a narrowing range. It comes after a strong push to the north that was seen in May; ETH/USD had jumped a whopping 85% to the highest level since September 2018.

The trend higher is part of a larger recovery, which has been observed throughout 2019 so far. After taking a big beating throughout 2018, Ethereum has managed to recover some 180% from the start of this year. There isn’t any sign of a change in this trend at present, as the bulls look for greater heights.

ETH/USD daily chart.

Bullish Flag

During the above-noted consolidation period, ETH/USD has managed to construct a bullish flag pattern formation. The bulls have been testing the upper acting trend line of resistance, which suggests a breakout, not if but when. In terms of the structure’s pole, this was the dominant trend higher, which began late April.

The resistance of the flag is tracking at around $270, capping further upside; it has been tested on numerous occasions from May to June. To the downside, essential support tracks around $230, which is the lower acting trend line. If greater upside is to come, it is critical this structure remains intact until the bulls force the breakout higher.

Lastly, the length of the detailed flagpole equates to 85%, which in theory should see an equal breakout move. The bulls capitalizing on the structure would see ETH/USD flying back up into the $500 territory. Ethereum has not traded up at these heights since July 2018. Ahead of this area, there is just one small barrier in the way, the $295-$320 price range.

Trade Recommendation

Given the intact bullish flag structure, a buy position looks increasingly attractive. The bulls are maintaining the heights printed in May, which is encouraging on the stability side. ETH/USD at present is topped by near-term supply at $280. Once a break and daily closure above has come into play, this would be a potential confirmation.

The price will need to complete a break and retest of the $280 area. In terms of upside targets; $320, a supply area, last traded up here in August 2018, is the major milestone in the short term. Further north, eyes will be on the significant $500 territory, which was last seen in July 2018. Stops may be considered just below the flag structure and demand zone at $210.

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.

 

Author:
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.