Why you should be bullish on Ethereum price now

Ethereum price is forecasting a quick uptrend as it consolidates in a set up in a step lock manner at its current level. Investors need to keep a close eye on influential Bitcoin price action since it could ruin the setup. Considering the overall bullish outlook for the big crypto, however, ETH is likely to trigger an upswing soon.

Ethereum price reveals its recovery plans

Ethereum price has been coiling up since the January 22 crash and has set up two higher highs and three higher lows. Connecting these swing points using trend lines describes an ascending parallel channel. 

Interestingly, the last two times ETH tagged the lower trend line of the ascending parallel channel, there was a sudden uptick in buying pressure that resulted in a 40% rally. The third and the latest retest of this trend line was on May 2 and if history repeats itself, theoretically Ethereum price should climb to $3,800.

However, things are much more complicated due to the presence of resistance barriers that could slow down the ascent or limit it. The first hurdles that ETH bulls will face on their journey north include the 100-day Simple Moving Average (SMA) at $2,910 and the 50-day SMA at $3,066, coinciding with a horizontal resistance level.

Clearing the aforementioned resistance cluster will indicate that the buyers are back and propel Ethereum price to retest the 200-day SMA at $3,448. Therefore, investors can expect ETH to form a local top at $3,500.

On the off chance that the buying pressure sees strength around this level, Ethereum price could extend to the next major hurdle at $3,700. In a highly bullish case, however, a retest of $4,000 psychological level can be expected.

ETH/USDT 1-day chart

Interestingly, IntoTheBlock’s Global In/Out of the Money (GIOM) model also favors the bullish outlook but notes that the $3,000 barrier is extremely significant and will decide the fate of bulls. Here, roughly 4.3 million addresses that purchased nearly 15 million ETH are “Out of the Money.” A move into this area will be met with selling pressure from investors trying to break even. Therefore, the bulls need to overcome this cluster with sufficient momentum to have a chance at an upswing.

The on-chain index also shows that the subsequent hurdles are relatively small, which further supports a move to $4,000 or higher.

ETH GIOM

Further adding a tailwind to the already optimistic outlook for Ethereum price is the rapid decline in the supply of ETH held on exchanges from 21.36 million to 14.97 million. This 30% crash indicates that investors are moving their holdings off exchanges. Such transaction data not only reduces the sell-side liquidity but also reveals the bullish intent and expectations of these investors who expect a solid performance from the Ethereum price in the near future.

ETH supply on exchanges 

While things are looking up for Ethereum price, a daily candlestick close below $2,541 will invalidate the ascending parallel channel and bullish thesis for ETH. This development will produce a lower low below a crucial support floor and skew the odds in the bears’ favor.

In such a case, ETH could crash 22% and stabilize around the $1,986 support level. If the selling pressure increases, a sweep below the $1,730 barrier will collect the sell-stop liquidity formed in May and July 2021.