ETH technical analysis for January 11-17: a correction or a short-term top?

If Ether rebounds off the 20-day EMA it will suggest that the uptrend is intact but if the support cracks it will signal a trend change

Google Trends data shows that Google searches for “Ethereum” recently reached a new all-time high, which shows that Bitcoin’s epic bull run has boosted investor appetite for altcoins. The strong buying had propelled Ethereum’s market capitalisation above $150bn on January 10, overtaking the market cap of Honeywell and Union Pacific Corporation, according to Companies Market Cap.

However, the skyrocketing trading volume pushed the Ethereum network fees to a high at $17.43 per transaction on January 4. This eclipsed the previous all-time high fees of $12.54, recorded in September during the decentralised finance frenzy, according to YCharts data.

The DTAP Capital founder Nathaniel Whittemore in a recent interview said the Northern Trust’s plan to custody crypto assets shows possible demand from institutional clients. If institutions start pumping money into Ether, it could surprise investors as they are not thinking about that.

Let’s perform the Ether price analysis of the weekly chart and the daily chart to determine the critical support levels on the downside where bulls may step in and arrest the decline. 

ETH price technical analysis: weekly chart

Ether’s price soared 28.19 per cent last week to close at $1,254.26. During the week, the price had risen to a high at $1,351.41, just shy of the all-time high of $1,440. The strong rally of the past two weeks had pushed the Relative Strength Index (RSI) above 92, indicating frenzied buying from traders.

However, the failure to break out to a new all-time high may have attracted profit-booking today. The first support on the downside is the 38.2 per cent Fibonacci retracement level at $956.67.

If the ETH/USD pair rebounds off this support, it will suggest that traders are accumulating on dips. That could result in a move back to the $1,351.41 overhead resistance. A break above this level may push the pair to a new all-time high.

But if the price again turns down from $1,351.41, the pair may consolidate for a few days before starting the next trending move.

Let’s perform the Ether price analysis of the daily chart to spot the critical support levels where buyers may step in to arrest the correction.

ETH price technical analysis: daily chart

Ether’s price formed a long-legged doji candlestick pattern on January 10, followed by a sharp down move today. The long tail on today’s candlestick suggests that bulls are attempting to defend the 20-day EMA support.

If the pair sustains a sharp rebound, it will suggest that the uptrend remains intact as the bulls are aggressively buying the dips. The buyers will then try to resume the up-move by pushing the price above $1,351.41.

Conversely, if the bears sink the price below the 20-day EMA, it will suggest that traders are not buying the dips but are waiting to sell on rallies. 

This change in sentiment may attract further selling and a break below the 20-day EMA could open the gates for a further drop to the 50-day SMA.

ETH price technical analysis: trading this week

Traders may watch the price action near the 20-day EMA and consider buying if the price rebounds off this level with strength. However, this is an aggressive short-term trade, hence smaller position size could be used.

Contrary to this assumption, if the bears sink the price below the 20-day EMA, long positions could be avoided until a bottom is confirmed.

Trade Ethereum to US dollar: ETH/USD chart

Ethereum to US Dollar
Daily change
Low: 3816.53
High: 3883.3

FURTHER READING: How to trade Ethereum: the ultimate guide
FURTHER READING: What is Ether? Your simple guide to the cryptocurrency

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