Ethereum News: Eth Prepares to Break the $3.000 Threshold

Ether at the Point of Breakthrough

Ether appears to be preparing to break the $3.000 barrier as it forms an “ascending triangle” on the price chart. An ascending triangle is characterized by a horizontal upper limit, which acts as a resistance level or supply point, and a rising support line.

Price Action Analysis

Over the past two weeks, Ether has repeatedly encountered resistance at $2.735, with subsequent reactionary declines consistently higher. This price action demonstrates an ascending triangle. The higher lows indicate that buying pressure is increasing, underscoring the bullish nature of the ascending triangle. In other words, this pattern indicates accumulation, a phenomenon that usually lays the foundation for another rise in prices.

Expected Breakthrough and Implications

An expected breakout from this ascending triangle could signal a restart of the rally that started from the April low around $1.390 and could open the way to higher levels above $3.000.

The upcoming crossover of the 50-day simple moving average (SMA) above the 100-day SMA supports the bullish forecast. This points to a potentially powerful move, especially given the narrowing of the Bollinger Bands to almost $250. This narrowing has historically been a harbinger of explosive volatility, a phenomenon that has been observed repeatedly since November.

Bollinger Bands are volatility bands placed two standard deviations above and below the cryptocurrency's 20-day simple moving average. Charles Kirkpatrick, a Chartered Market Technician, noted in his book on technical analysis that “upward breakthroughs occur 77% of the time, and breakthroughs follow an average of about 61% of the distance from the base to the cradle.”

However, a possible downward breakout of the triangular consolidation would negate the bullish setup and possibly lead to stronger selling pressure.

Frequently Asked Questions

How reliable are ascending triangles in technical analysis?
Ascending triangles are often seen as bullish patterns, with a high probability of upward breakouts. Historically, 77% of the cases result in an upward breakout.

What are Bollinger Bands and how do they affect trading?
Bollinger Bands are volatility indicators that contrast an asset’s price levels with its moving average. They help traders anticipate potential price movements, especially when the bands are narrowed, as in this case.

What does an SMA crossing mean in the context of market movement?
A crossing where the shorter SMA (50-day) crosses the longer SMA (100-day) from below to above is often seen as a bullish signal, which can indicate increased buying pressure and the possibility of higher prices.