Ethereum Technical Analysis: ETH faces stiff resistance $600, yet overall sentiment remains bullish
Daily Ethereum (ETH) Price Analysis
- The daily chart is going through a stagnation period, as evidenced by the Bollinger band squeeze.
- The number of non-zero Ethereum addresses has surpassed the 50 million mark for the very first time.
2021 is going to be an excellent year for Bitcoin and Ethereum, according to Frank Holmes, CEO of U.S. Global Advisors. While Bitcoin will benefit significantly from institutional investors, Ethereum will benefit greatly from being the DeFi platform of choice. While long-term projections like these are certainly pretty optimistic, let’s look at how ETH will perform in the short-term.
Ethereum faces stiff resistance at $600
As shown by the ETH/USD weekly chart, the TD sequential indicator has flashed a sell signal with a green-nine candlestick. Plus, the relative strength index (RSI) has been hovering in the overbought zone, showing that the smart contract leader is currently overpriced in this timeframe. Both of these indicators tell us that the price is going to experience a retracement.
Image: ETH/USD weekly chart
Adding further credence to the bearish outlook is the MACD indicator in the daily chart. The MACD or the moving average convergence/divergence is a useful tool that helps us visualize the current market momentum. As you can see, the MACD shows increasing bearish momentum. There seems to be a heavy resistance barrier around $600, which is pushing the price down.
Image: ETH/USD daily chart
The Bollinger bands are currently squeezing down on the daily price chart. This tells us that ETH is presently going through a period of low volatility. This is the consolidation phase before Ethereum’s price breaks out. Let’s look at the downside targets for our price.
Up first, we have the $565 support line, which coincides with the middle Bollinger Band. This should be able to stem any downward flow. A break below this will take the price down to the $520 support wall.
On-chain metrics looks pretty bullish
While the price remains poised for a retracement, various on-chain metrics show that the overall market sentiment for Ethereum is hugely bullish. Glassnode, a popular on-chain metrics firm, has a chart that shows the number of non-zero addresses on the ETH network.
According to the chart, the number of non-zero addresses surpassed the 50 million mark for the first time. This is hugely significant as it shows that more and more investors are entering the market to get their own slice of the ETH pie.
There is another exciting thing to keep in mind. Back in January 2018, when Ethereum charted its all-time high, the number of non-zero addresses was only around 8.8 million. This tells us that there is plenty of room for Ethereum to grow.
Ethereum 2.0 continues to spur growth
Ethereum’s march towards the ETH 2.0 upgrade is the main reason behind these positive on-chain metrics. Ethereum founder Vitalik Buterin recently tweeted that approximately 1% of the total Ether supply has been sent ETH 2.0's deposit contract.
An interesting point that Buterin notes is that the decentralization stats for Eth2 validators is “far better” than he expected. This tells us that the Ethereum community is extremely optimistic about the upgrade and is looking forward to being a part of the proof-of-stake network.
Ethereum’s price levels to watch
With a short-term retracement in order, the key levels to watch out for are the $565 and $520 support lines. If the price were to fall below these levels, it could be pretty catastrophic for the buyers. On the upside, the bulls have to figure out how to remain above the $600 zone. This seems like the most challenging obstacle before ETH rises to $1,000.