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Ethereum rallied on Friday, initially reaching well above the $1,400 level before pulling back, closing the daily candle just below around $1,390. This is a bullish continuation for ETH as it appears we are strikingly close to a breakout higher, we just need a technical close above the resistance level or a bullish catalyst with follow-through like Elon Musk's Twitter update today.
(January 29, 2021 8:30 PM EST)
Ethereum's chart looks simply too bullish. Higher highs, higher lows, an ascending channel that's clearly testing a major resistance level -- and breaching it on multiple occasions. Not to mention, following the parabolic end of 2020 rally, ETH completed a ~33% correction from the $1,350 high down to $900. It seems all but certain at this point that that was our correction low unless something radical changes here. With market sentiment volatile but not in opposition of crypto or safe-haven assets like gold, ETH is poised well for a nice run and further support as the anti-Wall Street movement grows and disenchanted individual investors are increasingly awakened to the benefits and tradeoffs of cryptocurrencies and decentralized finance (DeFi) made possible by Ethereum. The herd is coming; will you be there to benefit from it?
Also consider the ETH/BTC chart below. As you can see ETH is in a clear uptrend and has broken out from its multi-year downtrend on the daily chart. Most notably was the recent breakout above the 0.04 level up to 0.045 where ETH pulled back. Yesterday, ETH saw a drop below the 0.04 level but was quickly snatched up and recovered on the day to above 0.04. Today we saw further support around 0.04 as ETH holds onto the gains its made against BTC, which has been struggling as of late but has paled in comparison to ETH, which has held up remarkably well as of late. If the ETH/BTC ratio can hold the 0.04 support level, then we should see a steady rise from here which corresponds well with the ETHUSD chart which strongly suggests a bullish breakout higher. If ETH does breakout higher, then we could see a move on the ETH/BTC chart to the 0.06 level which would be the next historic resistance level of note.
Bullish Variables:
I'm not going to beat the same bullish ETH horse to death, so here are (some) of the cliffnotes:
- Ethereum CME futures trading launches in Feb
- Phase 0 Beacon Chain launched on time (Dec. 2020) - Over $1B ETH staked to-date
- ETH 2.0 Phase 1 estimated to launch in late 2021
- EIP-1559 expected to launch soon, reducing congestion fees
- >80%(?) of crypto projects are built on Ethereum (ERC-20)
- Exchanges are running out of ETH reserves
- Grayscale ETH Fund seeing huge demand increase
- Reddit announces partnership with the Ethereum Foundation
- Network effect of being second-largest crypto on nearly all exchanges (retail can't afford Bitcoin, but hey I can afford 1 Ethereum!)
Simple strategy: Buy the dips and earn ETH however possible. Otherwise, DCA on a weekly/biweekly basis, whatever you can afford. Historical charts and models all point to 2021 being substantially better for crypto and ETH in particular, although ETH has outperformed BTC in 2020 so really it's no surprise there.
Support: Alright, we have to call $1,000 support at this point. $1,200 looks to be supportive as well recently, and has held during a couple pullbacks. This marks higher lows = bullish.
Resistance: I'm sitting on my hands waiting for an impulsive break above $1,400 which remains immediate resistance but continues to face pressure day after day. This means ETH is gaining strength and looking to break higher very soon. Then, ETH should hit $1,500 and then $2,000. EOY 2021 I think ETH could very reasonably be $3,000 - $5,000, but $7K - $8K is not out of the question once ETH holders lock up their ETH for staking rewards once PoS is live.