Ethereum 360 #3: 17th May 2021
Hello everyone, I’m back again with the third installment of Ethereum 360! As always, I’ll give you on-chain data and technical analysis. So, trend reversal? Buy the dip? I’m going to try to reveal all in this article. Enjoy the read!
DeFi dynamic despite continued high costs
This Glassnode graph shows where Ethereum (ETH) is being held. We can see that ETH held on exchanges has fallen to 12%, while ETH locked up in smart contracts amounts to more than 22% of total supply.
Ethereum 2.0 is not here yet, so transaction fees (AKA gas) remain high, but in the meantime, DeFi is being used more and more. This is a very promising sign for ETH 2.0 and use that is only set to increase in the future.
Ethereum drops nearly 30%
After its meteoric rise, Ethereum saw a correction, as did other cryptocurrencies in general. The last two daily candles show support from buyers. For now though, the bears are in control of the market, yet this seems to be less and less the case. This last wick has filled part of the imbalance structure and is supporting, for now, the daily order block. This must be further supported by buyers to keep ETH looking bullish.
Overall, we returned to the $3,200 consolidation band, an area that was one of the origins of this strong bullish movement. If the bearish momentum continues, the support zone around $2,500 is an area to watch for a potential rebound, if not the second support level of $2,000.
We are still in a bearish short-term trend, since the previous head and shoulders broke downwards to initiate this bearish movement.
This area between $3,600 and $2,700 is also a key zone that will be important to break through to resume this medium-term bullish trend.
Focus on the Short Term
On the hourly chart, which is the lowest chart I use, we can see this downtrend perfectly. The first signs of a trend reversal will most likely be seen on the hourly timeframe.
A descending trend line is keeping prices lower. A break above will be a strong sign of a reversal. The $3,600 price level, which is also resistance in my eyes, is a good place to start switching from bear to bull. A potential head and shoulders is being created, but nothing is set at the moment and it’s too early to call a trade.
That’s it for this installment of Ethereum 360. Remember: never invest more than you can afford to lose and especially, DO YOUR OWN RESEARCH! I wish you some great trades and I hope to see you next Monday for a new article!
Hi, Привет & Salut! I’m interested in two things: crypto and languages. So I’m really excited to be part of the multinational CoinTribune team, where I can share my crypto knowledge with people from around the world, one article at a time.