Ethereum doji: a reversal candle on the weekly chart?

Ethereum doji: a reversal candle on the weekly chart?

Ether is currently in the middle of the $2000 to $1000 range. On the Ethereum (ETH) candlestick chart, weekly scale, we can also see a “doji” formation. This is a trend reversal candle. However, the fact that it is in the middle of the range, with a very small volume leaves us perplexed. Could Ethereum (ETH) be expected to rise based on this candle? Let’s try to combine it with other indicators.

A “Doji” on the Ethereum (ETH) chart: what does it mean?

In general, this Japanese candlestick pattern indicates a trend reversal. This is especially true when it is at the top of an uptrend, or at the bottom of a downtrend. In the case of Ethereum, here the Doji is in the middle of a three-month old range. This reduces the likelihood that it is a trend-changing pattern.

This hold can also indicate uncertainty in the market. In other words, it looks like the buyers are failing to push the price up. On the other hand, the bears do not have enough strength to push the price down. This seems to be the case with Ethereum (ETH). In fact, the price is found around the $1280 support area. Concretely, the price of ETH is stagnant around this level because, first, the bears selling from $1770 are starting to close. Second, many bulls place their buy orders around this area. Except that all these orders are not enough in terms of volumes to raise the price. Maybe that’s why Ethereum is kind of uncertain, which makes the chart look like a Doji.

Doji Ethereum
Ethereum (ETH) / Dollar (USD) / source: Binance

What situation will happen?

Regarding the second crypto according to market capitalization, two scenarios can be considered. The first was to lower the price towards the lows in the $1,000 range. This could happen after some economic news that will be released this week. Among these news, we can mention the Fed’s decision on interest rates, but also the “non-farm payroll”. The release of these data usually results in high market volatility. Therefore, a single candle in H1 would probably push the price of ETH towards $1000.

Regarding the second scenario, we can consider a rise in the price after the retracement of the $1280 support. In my opinion, this second scenario for Ethereum looks unlikely unless the current weekly candle closes as a Doji. For that, we would have to wait until the end of the week, when strong fluctuations are about to happen this week with the FOMCs and NFPs.

A Doji formation on Ethereum’s weekly chart appears to be a false signal for an upside. In my opinion, there is a lack of volume, and the RSI does not indicate that the digital asset is oversold. Of course, other indicators can predict the opposite. In any case, we keep an eye on how the market reacts after today’s and tomorrow’s economic news.

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The Contribune Editorial Board

Cointribune’s editorial team unites their voices to express themselves on topics specific to cryptocurrencies, investment, the metaverse and NFTs, trying to answer your questions in the best possible way.

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