Many investors will probably find the current trend in the crypto market very boring. Because the top coins are not very volatile and have been in a consolidation phase for weeks.
A good example of this is the Ethereum course. ETH/USD is currently trading at around $1,350. This is almost the same value as a month ago. The sideways step between 1,250 and 1,400 dollars has been going on for about 5 weeks now and there is no end in sight.
But Ethereum buyers should not become indifferent despite this unimpressive step, but should keep a close eye on the trend at ETH. Because the longer a low-volatility movement lasts, the more violent the subsequent breakout becomes. This is illustrated by numerous examples from the history of technical chart analysis. The Ethereum course should not be any different in 2022 either.
Signs of major price movements in the Ethereum course
When exactly and in which direction the trend breaks out – no serious analyst can say with certainty whether there will be a sharp rise or a hard correction. However, based on the chart analysis, it is possible to say what scenarios are possible for the ETH course and what price targets Ethereum can reach in the corresponding scenario.
The Bollinger Bands technical indicator signals that the price may be preparing for a major move. It shows the average value arithmetic moving average of the last 20 days. The two outer bands show how far the price has deviated from the average value during this period.
If the bands are close to the mean line and contract optically, it can be assumed that an explosive breakout is in the near future. This is exactly what is currently seen in the Bollinger Bands on the Ethereum course.
Will the 2020 Bullish Scenario be held again?
The last time the bonds were so tightly bundled on the daily chart was in October 2020. At that time, a major rally followed shortly thereafter and the 2020/2021 bull market began, bringing the price of ETH/USD close to $5,000.
Such a scenario can be imagined again in the current constellation. However, the question is whether the economic policy framework with high inflation, rising interest rates and the general uncertainty among buyers of cryptocurrencies will allow such a price explosion in the short term.
The Ethereum course is currently testing the upper band. However, rejection may quickly lead to a refund to the lower limit. Therefore a downward correction is less likely than a breakout at the moment.
The chart analysis shows the EMA ribbons as another important indicator for the Ethereum course. This Exponential Moving Average shows a moving average price for different time periods, in this case, the past 20, 25, 30, 35, 40, 45, 50, and 55 weeks. Here, too, it can be seen that the ribbons are coming together more and more at the moment.
Strong resistance in Ethereum price
Ribbons that are very close together can also indicate volatile price action. However, as long as the red ribbons seen on the chart are up, this is not a good sign. While the yellow ribbons are usually at the top in a bull market, the red ribbons are at the top in a bear market.
This could indicate that the next price move could be more bearish. However, the ribbons are currently so close to each other that a so-called “flip” is also possible. This means that the yellow ribbons are slipping over the red ones and could trigger a bullish price movement in the short term.
A possible move above $2,000 despite the bear market
Currently, the ETH/USD rate is trying to be above the ribbons. This could be a good sign as the ribbons are often supportive in a bull market. However, this only applies to the daily chart. Looking at the weekly chart, ETH is still well below the upper bands. Here, ETH/USD could even rally to $2,000 without changing the bearish structure on the weekly chart.
Another popular indicator is the Relative Strength Index. It can provide information on whether an asset is currently overbought or oversold. The Ethereum course currently looks to be just over 50 and therefore in a neutral zone. Ethereum is currently neither overbought nor oversold according to this indicator.
A sell signal can only be created when Ethereum enters the 70 RSI area. Conversely, the RSI could fall into the 30 area and generate a buy signal.
The currently mentioned indicators do not allow many conclusions about whether the price of ETH/USD will rise or fall in the near future. However, another chart pattern seen on the daily candles is interesting here.
ETH chart pattern: Decision by December 6th
For example, ETH/USD has been in a symmetrical triangle since mid-June. This is basically a neutral pattern. However, since Ethereum created the formation from a downtrend, another correction and therefore a continuation of the negative trend is considered more likely.
However, a quick directional decision cannot be expected here. So ETH/USD theoretically has until December 6th to stay in the pattern. In extreme cases, it would be another six weeks that ETH/USD could remain in the sideways phase.
However, most chart patterns are not left at their endpoints, but much earlier. Here, the next interest rate decision from the US Federal Reserve on November 2 could possibly be the deciding factor in which ETH/USD breaks the pattern.
A 45 percent movement can yield huge results
If the Fed sticks to its tight interest rate policy as expected and increases the interest rate again by 0.75 percent to a total of 4 percent, this is already priced in by the markets in the current price of Ethereum. However, if the rate hike is higher or lower, it could create a bullish or bearish breakout.
Traders on crypto exchanges can definitely expect significant price movement with high volatility in Ethereum price. Due to both situations, a huge price change of 45 percent is expected, as the analysis of the symmetrical triangle shows. Of course, when trading with leverage, this volatile movement can be used more profitably if you are an experienced trader. Otherwise the risk of loss is very high
The bullish price target is between $2,100 and $2,300 depending on the timing of the breakout, well above $2,000. However, a correction could even lower the price of ETH below $300.