It’s been almost a month since the London Hard Fork and the famous EIP-1559 correction, and in that time Ether is back to price levels not seen since late May. Is this trend likely to continue?
Buy the rumors, sell the facts? Not this time!
Before the EIP-1559 update, the price of Ether was rising significantly. Some market participants assumed that right after the event it might fall. However, this did not happen. The reason could be that the market did not unanimously indicate that it was in a bull market, and at the same time ETH was still far from its ATH. Moreover, the effect of the aforementioned correction became, among other things, a reduction in the supply of Ethereum, as a result of its burn. This is a definite bullish factor. At the time of writing this article, we observe that the number of tokens destroyed so far, is already almost 160,000 units. This has the right to have a significant impact on the price and it is happening.
What the ETH charts tell us
When we look at the chart of the pair ETH/USD we can see that Ether has broken out of an upward triangle (indicated by the gray lines). At the same time, the lower line here is support, which should be observed in case of a possible correction.
We can also see Ether breaking out of Bollinger Bands, which usually accompanies strong breakouts after the period of consolidation, but at the same time may indicate short-term overvaluation. This breakout is even more disturbing as it is accompanied by divergence on the volume profile, as well as on RSI (marked with yellow lines). The MACD, on the other hand, is interesting, indicating a positive histogram reversal.
The upward continuation of this breakout could take the ETH price even to the vicinity of $4,380, which represents the token’s previous ATH. However, if the divergence is respected, it has the right to lead Ether to the aforementioned gray line, which at the moment is a support for the trend. Its breakout may indicate a fall to 2.880 USD, or to the next level located near 2.350 USD.
For the sake of completeness, it is also worth taking a look at the ETH/BTC chart. We can see on it that ETH used the 100-day moving average as support for the breakout (pink line). Importantly, the combination of the two coins does not confirm the previously noted divergence on the RSI. The MACD and volume profile also look positive, indicating a potential continuation of the move.
If this particular scenario plays out, resistance for Ether will become the level near 0.0824 BTC, from which Ethereum recorded its last bounce, occurring in mid-May. The potential downside scenario, on the other hand, also leads us to watch a few areas. The first of them is the 100-day moving average, which was already a support for the price. However, it is not a key level, as it has not always been respected. Another important variant is the yellow trend line, which during the current bull market acted as both a resistance and a repeated brake on declines for Ether. In turn, its breakout should direct our attention towards the region located around 0.0536 BTC.