Technician’s Take: ETH Rally Isn’t Over
- The market should try to balance by finding another roughly 50% rally from its 24 February low.
- US$3,486 is a reasonable near-term aiming point.
I’ve extended the date range out a little to encompass January in today’s chart. I’ve also plotted swing lines over the candles to give a better sense of the general direction.
Now, typically the market is always trying to seek a balance point. This search is constant and occurring across multiple timeframes. Often, the market is looking for key prior levels where price was active before. Perhaps where sellers were once trapped and have resolved to finally bail out as soon as price reaches back up into that point again. Or perhaps its where buyers missed the boat and have resolved to buy as soon as price falls to that potential entry point again. These, by their nature, tend to be horizontal levels and represent support and resistance.
The market also “thinks” in terms of cycles, swings and percent changes. The rally from the 24 January low to the 9 February high was 51.5%. Other things being equal, the market should try to balance by finding another roughly 50% rally.
I have drawn a swing line up from the 24 February spike low and a 51.5% balancing rally from here targets US$3,486 (some 15% higher from the current price). It turns out that this upside target satisfies some longer-term horizontal levels, and it’s roughly where price broke down hard on 6 January and also the take off point in mid-October 2021. So for now, I think US$3,486 is a reasonable near-term aiming point.
As an aside, we have been focusing mainly on blue-chip crypto (Bitcoin and Ethereum) in these notes, but it doesn’t hurt to look across at the Level 1 protocols occasionally to see if the moves are uniform across the space. Looking across the others: Algorand, Avalanche, Cardano, Polkadot, Polygon, Solana, Terra and Tron, the average seven-day change is 12.6% (versus 10.5% in ETH) and 24-hour change is 4.1% (versus 3.1% ETH). The three leaders over seven days are Cardano +29.9%, Algorand +15.2%, Avalanche +12.2%.