- Ethereum has found itself in a bit of trouble during the Wednesday session, breaking down below the hammer from the previous session, therefore kicking off the so-called “hanging man” candlestick pattern.
- I don’t necessarily think that it means that Ethereum is suddenly going to collapse, but a little bit of a pullback could be in the works here.
- It would make a certain amount of sense, considering that Bitcoin has struggled to break above the $120,000 level, so if Bitcoin starts to drop, it’s likely that Ethereum will follow right along.
Technical Analysis
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The technical analysis for Ethereum is very strong, as we have rallied rather quickly. Breaking above the $3000 level is a good sign, and we ran all the way to the $3800 level. The market, rallying above the $3800 level, could send the Ethereum market to the 4000 level, which obviously has a lot of psychology attached to it as it is a large, round, psychologically significant figure.
Even if we do fall from here, I think there’s plenty of support all the way down to the $3000 level, assuming that we even get there. Furthermore, you need to pay close attention to Bitcoin, because if Bitcoin rises or falls, does have a certain amount of a “knock on effect” in the Ethereum market. All things being equal, as goes Bitcoin, so goes Ethereum in general. The market is a little overextended at this point, so I do think that a pullback is probably going to end up being very healthy for this market.
Ultimately, I do think that you need to pay close attention to volatility overall, because the markets have been extraordinarily choppy and almost all assets that I follow. Ethereum could in fact be a little bit of a laggard, but at the end of the day it will move in the same direction as Bitcoin, as it is quite often used as a “2nd choice” for Bitcoin traders. If we were to break down below the $3000 level, then I think things really start to fall apart. I don’t expect that, but it is something to keep in the back of your mind.
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