John Isige
Ethereum price hangs on the edge of a rectangle breakout with the potential to blast it to $2,600 as momentum and optimism build ahead of spot BTC ETF approval.
Published 10 mins ago
As the window for spot Bitcoin ETF approval shrinks to 36 hours, market participants exhibit contrasting strategies. Bulls favor a breakout in Bitcoin and Ethereum price, while bears anticipate a correction triggered by the “sell-the-news” narrative, potentially preceding a longer-term upward trend.
Ethereum Price Trend Continuation Depends On Critical Support Levels
Although buoyant, Ethereum price stalled close to the stubborn $2,400 resistance. The leading smart contracts token has since early December consolidated within a narrow range, with resistance cut out at $2,400 and support around $2,200.
It is this consolidation that has led to ETH forming a bullish rectangle pattern which if validated may treat investors to a 10% move. Therefore, the next sessions could determine the next direction Ether takes.
Similarly, if the immediate support highlighted at $2,274 by the 20-day Exponential Moving Average (EMA) (in blue) remains intact, the least resistance would shift upwards, paving the way for Ethereum price to activate the rectangle breakout targeting highs at $2,600. It would be worth looking out for a daily candle close above this support line likely to reinforce the bulls’ presence in the market.
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Long-term success in a news-sensitive market necessitates a measured approach. While experienced investors navigate this volatility with practiced caution, novice traders might find it particularly challenging.
The Moving Average Convergence Divergence (MACD) indicator, although donning a sell signal, has the potential to send a call to buy ETH in the near term.
Before entering new long orders, traders must make sure that the MACD line in blue is above the signal line in red and accompanied by an upward-slopping movement.
Prudence remains paramount even amidst bullish murmurs. As Ethereum price continues to lack directional momentum, a breach below the 20-day EMA (purple) support would lend credence to the prevailing bearish sentiment. This, coupled with the potential market response to the approval of spot Bitcoin ETFs, could intensify downward pressure on Ethereum, potentially pushing it towards the $2,200 rectangle support level.
Collecting liquidity from this support could mean that Ethereum price gains momentum to make another approach for a breakout to $2,600. However, if the support weakens amid increasing panic-selling pressure, ETH may be forced to retest $2,200 and perhaps brush the 200-day EMA (purple) support before the next significant trend reversal starts to build.
The token is also approaching the 2022 low on the ETH/BTC pair, which crypto analyst Michaël van de Poppe believes holds immense liquidity to support the next breakout above $3,000.
#Ethereum approaches the low of 2022 and is likely going to take the liquidity there.
If an ETF approval for #Bitcoin happens, I think we’ll have a liquidation candle on ETH/BTC and after that a rotation into Ethereum, combined with a bullish weekly divergence. pic.twitter.com/kGq91S7kq9
— Michaël van de Poppe (@CryptoMichNL) January 9, 2024
The anticipation for the ETF would greatly impact the performance of Ethereum price. While a sell-the-news scenario is possible, investors cannot ignore the spike in capital flow likely to give cryptos like ETH and BTC momentum to hit higher highs.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
