Jonathan Morgan
Independent Analyst
- Ethereum price remains inside the Cloud and finds support.
- Threats of near-term bearish price action dwindling.
- Bullish breakout opportunities are developing.
Ethereum price confirmed a primary confluence zone of support near the $3,800 value area. Holding this zone was necessary to prevent a collapse in prices. However, Ethereum must continue to drive higher to stave off any near-term bearish sentiment.
Ethereum price hints at a breakout above its bull flag
Ethereum price has two primary resistance levels ahead of it that are currently preventing further upside momentum. The Tenkan-Sen at $4,050 and the Kijun-Sen at $4,100 are the two levels that Ethereum must break and hold above. Doing so would create an aggressive early buy opportunity.
The hypothetical buy opportunity is a buy stop order at $4,125, a stop loss at $3,800, with a profit target at $5,435. The entry is only valid if the daily close is at or slightly above the $4,125 price level. While it is often not a good idea to take trades when an instrument is inside the Cloud (it is expressly warned against in the Ichimoku Kinko Hyo system), this current setup is a rare exception.
The exception is based on the conditions of the oscillators. The Relative Strength Index has maintained a tight congestion zone between the two oversold levels in a bull market, 40 and 50. Most importantly, however, is the Composite Index. The Composite Index has crossed above both of its moving averages simultaneously – while it has been in neutral territory.
The combination of the Relative Strength Index and Composite Index values indicates significant momentum behind Ethereum price if it can trigger its hypothetical bullish entry.
ETH/USD Daily Ichimoku Chart
The hypothetical long setup is invalidated if Ethereum price has a close below the Cloud.
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