Will Ethereum Pull Back to Technical Support?
Most technical traders live and die by support and resistance levels as the most steadfast rules of trading. Some of the hottest trading around today involves cryptocurrencies, with Bitcoin, the most famous amongst a pack of digital assets, sizzling upwards to the tune of some 1,500% in 2017 alone. Ethereum, while widely associated with Bitcoin, is different because it is more than just a digital currency; it has more features and blockchain applications.
Without going down that rabbit hole to explain the difference, Ethereum has experienced an even bigger climb over the last year, gaining 5,221% across the same time that Bitcoin has climbed 1,989%, according to the latest data on coinbase.com Thursday morning.
Question is: Currently trading about $433, will Ethereum pull back to what should be a strong support around $390?
Resistance and support levels are broadly defined as areas where prices of a financial asset (stock, currency, etc.) will reverse in movement for either climbing (selling starts at resistance) or dropping (buyers come in at support). The degree of strength is determined by the number of times the level is touched and holds as a barrier to continue the ascent or decline.
A golden rule of technical analysis is that once resistance is broken, it becomes support and vice-versa. With that in mind, look at the Ethereum chart:
After nearing $500 on December 3, Ethereum has pulled back some. In the big picture, the trend is in favor of the bulls and a climb continuing, as big money is finally starting to get behind crytpocurrencies. Should Ethereum continue to consolidate, though, it seems most plausible that it should attract strong buying pressure again around $390, or even the psychological denominator at $400.
After all, there’s a reason that technical analysis has been followed as a trading discipline for centuries.