Ethereum Technical Analysis: ETH Reaches A New All-Time High Level

Last Updated July 23rd 2021
6 Min Read

Daily Ethereum ETH Price Analysis
  • The Ethereum price is currently trending in an upward channel formation.
  • The 4-hour chart is on the verge of flashing a sell signal in the TD sequential indicator.

Ethereum price jumped to $1,475 in the early hours of today to reach a new all-time high. With the bulls in full control of the overall market, we can expect ETH to soon breach the $1,500 psychological level. However, a couple of indicators in the 4-hour chart shows that a bearish correction could be around the corner.


Ethereum Price Is Trending In An Ascending Channel Formation

The Ethereum price has been trending in an upwards channel formation. On Friday, January 22, ETH managed to flip the 20-day SMA from resistance to support, as the bulls eventually managed to string together four consecutive bullish sessions. During these last four days, the Ethereum price climbed from $1,100 to $1,425.

eth/usd daily chart 012521

Image: ETH/USD daily

The IOMAP shows us that there are no known resistance levels upfront, which gives ETH the freedom to chart new levels. On the downside, the healthiest support is at the 20-day SMA ($1,235). Previously, at this level, 935,000 addresses had purchased 9.5 million ETH tokens.

eth/usd volume chart 012521

Image: IntoTheBlock

The 4-hour Ethereum price chart also shows us that the smart contract leader is trending in an upward channel formation. Plus, the 20-bar SMA is on the verge of crossing over the 20-bar SMA to form the bullish cross pattern.

eth/usd 4-hour chart 012521

Image: ETH/USD 4-hour

However, the daily chart also shows two negative signs that could indicate a short-term bearish correction. Firstly, the relative strength index (RSI) is on the verge of creeping into the overbought zone. This could mean that Ethereum is on the brink of becoming overvalued. 

Secondly, ETH price is on the verge of flashing a sell signal in the form of a green-nine candlestick in the TD sequential indicator. Both these indicators could soon trigger a bearish correction.


DeFi Is The Main Factor Behind Ethereum Price Growth – Analysts

After gaining over 300% in value over the last few months, Ether (ETH) is trading at its highest point in roughly three years. Many industry experts believe that the decentralized finance (Defi) sector's immense growth is what’s pushing Ethereum price forward. 

Brian Norton – chief operations officer of My Ether Wallet – explained in a recent interview:

2020 saw the explosion of the Defi ecosystem on Ethereum – first hitting $1 billion in total value locked in February, now $20.5 billion in only 11 months. This growth has attracted many new users seeking yields that are not available on bitcoin with centralized intermediaries. 

He added that many people had allocated time, money, and resources to the Ethereum network since the launch of ETH 2.0. When completed, the upgrade is set to make the blockchain more scalable and effective in terms of payments, transactions, and the creation of applications. This has caused the DeFi space to surge the way it has. He added: 

What I am watching is developer activity on Ethereum, as it serves as an indicator that new and better use cases are coming which will increase demand for the native asset. Ethereum has over five-fold the number of active developers as bitcoin and is adding developers at a faster clip every day.

Paolo Ardoino, the CTO of Bitfinex, said that the DeFi space had caused a few problems for the ETH community. However, it’s likely to bring a whole new level of strength to the ETH network in the long run.  

While the explosion of projects in Defi has caused growing pains for Ethereum, layering solutions are in the works that are helping the network to scale.


ETH 2.0 Upgrade IS Going Smoothly – Ethereum Lead Developer

Ethereum lead developer Danny Ryan has recently released an update outlining details about ETH 2.0’s development. In a blog post titled “The State of Eth2,” Ryan noted that the beacon chain now has 2.5 million ETH staked in it. 

A few crypto community members believed that Ethereum’s transition from the proof-of-work (PoW) to proof-of-stake (PoS) consensus would make ETH1 obsolete. Commenting on this, Ryan clarified that both ETH 1 and ETH 2.0 would continue to function, as the term only refers to separate layers of the Ethereum network. 

The terms “eth1” and “eth2” are misnomers. If I had my way, I’d toss them out forever. These designations – eth1/eth2 – imply a false sequentiality. They imply that eth1 will be deprecated in favour of eth2, that one is being left behind for the other. Instead, the terms actually represent different layers of the stack.

The dev further added that ETH 1 encompasses the operation and upgrade of the network’s user layer (state, transactions, and accounts) as it concerns Ethereum’s end-users. On the other hand, ETH 2.0 is a series of upgrades designed to overhaul Ethereum’s core consensus from the current PoW to a “more sustainable, and scalable proof-of-stake.” ETH 2.0 will ultimately make the ETH 1 user-layer better. 

Ryan noted that although the ETH 2 beacon chain has been running smoothly, the team will continue to keep testing, evaluating, and improving it throughout 2021 before merging ETH1 and ETH2. He added that the high gas fees on the Ethereum network would be fixed even before or after the merge, as the implementation of EIP 1559 is entirely independent of the ETH2 development. 

EIP 1559, a highly anticipated upgrade of Ethereum’s fee market, is also sufficiently independent of eth2 and can technically happen either before or after eth2 merge. That said, R&D on this item has picked up steam in the past 12 months, and we optimistically will see 1559 fee mechanics on mainnet in 2021.


Ethereum Price Is Expected To Reach These Levels

Ethereum price should have enough in the kit to breach the $1,500 psychological level. Even if ETH goes through a temporary correction, it should still breach these levels.

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