Ethereum initially fell during the week ending August 30th, pulling back to the $375 USD level before the buyers stepped in, with ETH settling around $395.00 on Sunday, August 30th. This is a potentially bullish candle on the Weekly timeframe after a large red bearish candle the previous week, indicating that the sellers may be exhausted and the bulls are willing to buy dips and resume the uptrend.
(Aug 31, 2020 7:30 PM EST)
Ethereum has found support around the $375 level, which is close to the long-term $400 level which has acted as a significant inflection point; if ETH is below $400: sell; above $400: buy. If ETH can hold/regain support at $400, it should be the perfect level to build up momentum for another move higher, first $500, then $600. It was only a month ago that ETH surpassed the February highs around $300 and $350 highs from July 2019. This is, of course, a huge bullish development and positive uptrend, and given the current monetary policy in the US and EU and macro overview, commodities and assets with fixed supplies should continue to do very well over the medium-term. Remember, we are in a new reality with unlimited Federal Reserve Quantitative Easing and inflation, and assets like Ethereum and Bitcoin, which have minimal levels of inflation (and potentially not far off deflation, according to Vitalik Buterin), should see excellent price valuations relative to fiat currencies.
Ether is currently trading well above the 50 and 200 Week EMA's, which should act as major long-term support below around ~$250, which is also around the 50% and 61.3% fibonacci retracement levels. If ETH falls below the 200 Week EMA around $245, the overall uptrend is in jeopardy. I gather this is extremely unlikely and only accomplished via the entire network being taken down, or another COVID-related March-caliber sell-off; even then, we see such an event as short-term weakness and an excellent opportunity to add and a medium-long term accumulation zone.
Looking ahead, this is a buy on the dips scenario, with longer-term investors looking to add on pullbacks, particularly the $400 level and, frankly, anything lower. Next immediate resistance is the June 2018 highs around $500. If ETH can break above that, there may be some retail investors from early 2018 looking to get out from under their 3 year holds which have been red up until possibly later this year. Remember, Bitcoin has already climbed back 60% of the way to its previous all-time high; ETH is still down almost 70% from its January 2018 all-time high of $1,400, so there are probably additional sell orders ETH needs to slice through in order to get closer to making new all-time highs.
It's also worth noting that the ETH/BTC ratio as it currently stands is historically low and has quite a bit of room to 'catch up' to BTC's upward price movement YTD, as this ratio also works in cycles and indicates whether Ethereum is undervalued or overvalued relative to Bitcoin.
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