Technically, the 12-hour chart indicators are showing consolidation signs with a major bullish divergence.
ETH/USD to Recover Soon?
This past week, there was a major downside reaction in ETH/USD, but the pair held the $360.00-365.00 support area. Later, it started an upward move and traded above a main resistance at $380.00.
Likewise, ETH/BTC was under a bearish pressure and traded below 0.0540BTC. Later, the pair recovered, traded above 0.0550BTC, and is currently consolidating in a tight range for the next move.
Let’s start with the 12-hour chart of ETH/USD to understand the current technical structure and the importance of $365.00 support. The pair started a five-wave decline from well above the $850.00 level and it likely completed the fifth wave near the $360.00 level.
A significant support base was formed around the $360.00-365.00 levels and the pair started consolidating in the range of $365.00-420.00. Recently, Ether traded higher and broke a key bearish trendline with resistance at $385.00 on the same chart.
Therefore, the price could continue to grind higher toward the range resistance at $420.00. The next resistance is close to the 23.6 percent Fibonacci retracement level of the last decline from the $868.59 high to $359.33 low at $475.00.
However, the most important hurdle for a trend change awaits at $500.00. Dropping down to the 2-hour chart of ETH/USD, the pair broke a connecting bearish trendline at $382.00 to start a decent upward wave toward $400.00 and $420.00.
The pair is currently testing the 50 percent Fibonacci retracement level of the recent drop from the $419.38 high to $363.68 low. A successful 2-hour close above $390.00 and $400.00 could open the doors for a push toward $420.00.
Overall, the technical structure is positive in the short term above $380.00. In the medium term, Ether’s price must clear the $420.00 resistance to initiate a fresh bullish trend.