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Ethereum Technical Analysis: ETH crawls between critical levels

3 Min Read
Last Updated March 27th 2021

Daily Ethereum ETH Price Analysis

  • Ethereum is moving horizontally above the 20-day SMA.
  • The 4-hour price has broken below the 20-bar SMA.

After bouncing up from the $545 support level, Ethereum managed to cross above the 20-day SMA. It feels like the smart contract platform is on the cusp of a significant price movement. Now, is this movement going to be positive or negative? Let’s take a look.

 

Ethereum caught between a rock and a hard place

As shown in the daily chart, ETH has been trending horizontally for the last three days between the $592.25 resistance line and the 20-day SMA ($577.85). The resistance line is trending around in the neutral zone, which again indicates that the bulls and bears are cancelled each other out.

eth/usd daily chart 121620

Image: ETH/USD daily chart

However, when you shorten the time frame to 4 hours, things get a little more interesting. After the price climbed up from the descending wedge formation and got rejected thrice at the $592.25 resistance barrier.

eth/usd 4-hour chart 121620

Image: ETH/USD 4-hour chart

Following this repeated rejection, the price fell below the 20-bar SMA, which is a bearish sign. To prevent further downward movement, the 50-bar SMA at $570 needs to hold firm. The MACD has also reversed from green to red, which gives further credence to our negative outlook.

When we look at the daily chart again, we see that the price is consolidating in a symmetrical triangle.

eth/usd triangle pattern chart 121620

Image: ETH/USD 

If the price doesn’t recover and bears stay in charge, ETH risks a drop down to $435. However, if the bulls recover, the price may jump above $700.

 

Holders opting to hold on to ETH instead of selling it off

The amount of Ethereum (ETH) held on exchanges has dropped to a two-year low as the number of withdrawals has exceeded the deposits. According to a Trustnodes report, about five million ETH has been withdrawn since March 2020. During that time, 19 million coins were held on exchanges, accounting for over 17% of the total supply. 

As of November’s data, there’s currently about 14 million ETH (13% of the total supply) held on exchanges. Data by Santiment indicates that the ETH held on exchanges has fallen further since November 23rd. 

As per a general assumption, the more ETH is sent to exchanges, the more it is to sell it for cash, thus lowering the coin’s price. On the other hand, ETH is likely withdrawn by new investors who purchased it and are now transferring it to their cold wallet. This reduces sell-side liquidity as there’s less ETH available on exchanges to market. This metric is a useful indicator in trend or even medium-term analysis. However, it's unclear whether this is a leading or a lagging indicator.

 

Key price levels to watch for ETH

With the price breaking below the 20-bar SMA in the 4-hour chart, the 50-bar SMA at $570 becomes extremely important. If the price breaks below that, the 200-bar SMA ($545) becomes a critical bear inhibitor. The buyers need to flip back the 200-bar SMA from resistance to support to continue its upward movement on the upside.

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