Right at midnight last night (UTC), Ethereum (ETH) did what looked impossible and shattered a hugely important resistance level – a level we’ve been watching on these pages for some time – while being already way overbought. This was the ‘2017 Capitulation Line’ on the ETH/Bitcoin chart, which marked the spot in 2019 where Ethereum’s price descended into lows not seen since 2017. With this level retaken, it seems little can stop Ethereum in 2020.
We start on the ETH/Bitcoin daily chart, and clearly see the destruction of the afore-mentioned level residing at ₿0.023121. This is extremely bullish, as this level has been rejected multiple times in the last few months, as ETH tried to reclaim it. Now, with such a strong break of the level, it seems very likely to withstand a retest should one come.
The degree to which Ethereum is now technically overbought is becoming alarming, with price now outpacing the 55 EMA by about 23%. At some point, this breakout has to correct, and it’s likely to correct hard – but with so much momentum built up, it’s hard to say when that will come.
On the ETH/Dollar weekly, we get a fuller picture of what the surge means. The regional market structure has been broken, after the break of the September high. At this point, Ethereum doesn’t have to do much to maintain the powerful new uptrend. Holding around $220 would certainly be very bullish; the ideal scenario from here is probably consolidation in the just-taken support zone.
The weekly RSI has very quickly blown through Ethereum’s historical bear-bull inflection zone, and is now far above – indeed, it is almost technically overbought. And so far in the week, the histogram is pointing straight up with a flat trajectory. And the EMA is very quickly reverting to a bullish configuration, with the 8 gunning for the 55, and bringing the 21 with it.
Ethereum is now mega-bullish. We should be on the lookout for a correction, nonetheless.
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