Ethereum has had a strong run for the last several sessions but now is facing significant resistance in the neighborhood of $1925. Early during the Thursday session, there was an attempt to break out, but it looks as if that attempt is starting to run out of momentum. The overextension of the bullish pressure will continue to cause some issues as well, and it could very well cause a pullback before it is all said and done.
Underneath, the 50-Day EMA sits just above the $1800 level and could be the first area of support on some type of pullback. Despite the fact that it has been so bullish lately, the reality is that markets do run out of momentum and cannot go in one direction forever. With this in mind, value hunters will be looking to buy the dip going forward, as it’s obvious that there’s been more interest in Ethereum over the last several days. Conversely, if we break above the $1950 level, we start to fight the $2000 resistance barrier, which obviously would be very psychologically important.
Attention to the negative correlation between USD and Ethereum
Pay close attention to the US dollar, as Ethereum is priced in that currency, and of course, it has a negative correlation. If you see the US dollar strengthening everywhere else, it does not necessarily mean that Ethereum has to drop, just that it will have a harder time rallying. With that being said, shorting the market might be a bit difficult at this point, so it certainly looks as if it is a “long-only” type of scenario, or “sitting on the sidelines” going forward. It’s not until we break down below the 200-Day EMA, at the $1728 level that the trend becomes threatened. With that in mind, waiting for a bit of value on a pullback is probably the most prudent thing to do in a market that is starting to heat up yet again.
Remember, Ethereum is most certainly a risk asset, so we need to see so-called “animal spirits” come back into the financial markets overall in order to help Ethereum along. Pulling back from where we are now would be a natural extension of value hunting, so despite the fact that we could not break through at the first attempt, it looks like there will be more buyers coming soon.
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