Ethereum exploded up during the week ending December 20th, breaking out above the contentious $600 - $625 zone and reaching up to the $675 level before pulling back to $650 to close the weekly candle. This is an impulsive bullish candle that was inspired by Bitcoin's long-term breakout to new highs and Ethereum gaining exposure through institutional investors buying through a new traditional market fund and the already-existing fund reporting record in-flows as of late. Ethereum remains lagging behind BTC, as it does, but is, by all means, bullish and continues to find fundamental support in addition to a very well defined and ascending price pattern.
(December 20, 2020 7:30 PM EST)
Outlook: Ethereum looks ready to grind higher toward the $700 level and then $800, the former which is well within the range of the ascending channel as shown in the chart above. ETH is starting to gain notoriety and momentum from traditional finance in Bitcoin's footsteps which, at this price level, should have a substantially larger effect as ETH has a much lower price and smaller market cap. This makes it more susceptible to price reactions (appreciation) due to new investor funds. This is not to mention the prospect of ETH 2.0 making the asset not only a limited supply (which was already implied) but even deflationary. The next phased rollout of ETH 2.0 probably won't be until late in 2021 or so, allowing the smart money to accumulate at lower prices before the rising tide of crypto interest and rampant federal money-printing buoys fixed- or limited-quantity assets like Ethereum higher. I'm a buyer on dips and continue to DCA on a smaller scale at current levels.
If ETH pulls back from here, look for support around the $600 level which was fairly resistive as of late but it seems like ETH has finally impulsively broken above the level. From here, ETH has to grind its way up $50 - $100 at a time, though I think the medium-longer term path of least resistance is up. Once ETH breaks $1,000, I think the FOMO will start to set in a bit as it approaches its arbitrary January 2018 ATH of $1,400, a figure I believe ETH will breeze past in 2021.
To add even more intrigue, if you saw my recent Ethereum Monthly Forecast (January), you saw my analysis of how ETH looks to be setting up for a massive bullish breakout on the longer-term charts that will crush ETH's January 2018 high. This, in confluence with the weekly chart's seemingly bullish breakout pattern now developing, points to ETH making a rapid recovery up to the $1,000 level or higher in the not so distant future, most likely in H1 2021.
I'm a buyer on short-term dips - from a long-term perspective, I think ETH under $1,000 is great value, so to be able to get ETH under $600 is still a great discount - even in the medium term!
Support: I'm looking for support around the $500 level, then $450 and ultimately $400, which is my line in the sand. The 50 Week EMA is turning up and approaching the $350 level, which should give further support to $400 as it continues to rise.
Resistance: $600 is the immediate resistance, and I need an impulsive candle above it and holding it to prove a sustained rally. After that, $700, $800, and $1,000. After $1,000, ETH will probably start to trade similar to Bitcoin a few years ago where it starts moving in larger increments as investors inflows dwarf the market cap, causing rapid price discovery and causing euphoric jumps in price.
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