ETH technical analysis for January 18-24: the new all-time high may have to wait for a few days

Ether may consolidate in the short term before starting the next leg of the up move

Strong demand from institutional investors has been the main reason driving crypto assets higher. While most of the institutional money has flown into Bitcoin, Ether has also seen its share of investments, as investors diversify their crypto portfolio. The combined share of the top two cryptocurrencies in terms of market capitalisation is 86 per cent, while the rest is divided among the remaining 5,000 odd chains. In 2017, the top two coins held only 56 per cent of the value, showing speculative money had flown into several lesser alternatives.

Similar to the shortage in Bitcoin’s supply, Ether may be on the verge of witnessing a supply squeeze. Data shows that Ether’s balance on the exchanges has plunged by about 42.5 per cent since mid-May 2020. Glassnode data shows that only about seven per cent of Ether’s circulating supply is held on the exchanges, the lowest since July 2018.

The Ethereum network has struggled to cope up with the strong demand from decentralized finance space. However, several layer-two solutions are attempting to solve the problem and are gaining popularity.

With DeFi’s increasing popularity and growing institutional interest, can Ether make a new all-time high? Let’s perform Ether price analysis of the weekly chart and the daily chart to find out. 

ETH price technical analysis: weekly chart

The long tail on last week’s candlestick shows aggressive buying by the bulls at lower levels. This reduced the damage and helped Ether’s price to close at $1,231.61, with a marginal loss of 1.81 per cent for the week.

The bulls will now try to push the price above the $1,351.41 overhead resistance and resume the uptrend. The up move may face minor resistance at the all-time high of $1,440, but if this level is scaled, the rally may pick up momentum.

Both moving averages are sloping up but the relative strength index (RSI) above 88 remains in deeply overbought condition. Hence, even if the uptrend resumes, it may soon hit a wall.

If the bears defend the $1,351.41 overhead resistance, the pair may remain range-bound for a few days. Such a move will be positive for the health of the trend.

While the weekly chart shows aggressive buying at lower levels, let’s perform an Ether price analysis of the daily chart to ascertain whether the up move may resume or if the higher levels could attract selling.

ETH price technical analysis: daily chart

Ether’s price rebounded off the 20-day EMA on January 13 and has been consolidating near the $1,250 mark since then. The biggest altcoin formed a Doji candlestick pattern on January 17 and has formed an inside day candlestick pattern today (January 18). This shows indecision among the bulls and the bears.

However, if the bulls do not give up much ground and keep the price above the 20-day EMA, it will increase the likelihood of a breakout of $1,351.41. If that happens, the uptrend may resume. The upsloping moving averages and the RSI near the overbought zone suggest that bulls are in control.

Contrary to this assumption, if the price turns down from the current levels and breaks below the 20-day EMA, the ETH/USD pair may drop to $909.19 and then to the 50-day SMA. Such a move will point to a trend change.

ETH price technical analysis: trading this week

Traders who purchased on a bounce off the 20-day EMA would have made quick profits as suggested in the previous analysis.

Long positions can be considered if the bulls sustain the price above $1,352 for a few hours. The stops for this trade could be trailed just below the 20-day EMA.

However, traders may remain on the sidelines if the price dips and stays below the 20-day EMA. Long positions can be initiated again after Ether confirms a bottom.

Trade Ethereum to US Dollar - ETH/USD chart 

Ethereum to US Dollar
Daily change
Low: 3101.41
High: 3233.89

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

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