Ethereum, the second largest cryptocurrency by market capitalization, has been on the rise again, trading above $1,700 against the US dollar. The ETH price has resumed its upward trend, and it could gain bullish momentum if it clears the $1,720 resistance zone.
Ethereum had experienced a correction below the $1,700 support zone, trading below the $1,650 level, before finding support near $1,620. There was a clear move above the $1,650 and $1,665 resistance levels, turning the market sentiment bullish again.
The price has now cleared the 50% Fibonacci retracement level of the downward move from the $1,784 swing high to $1,616 low, trading above the 100 hourly simple moving average, and forming a key bullish trend line with support near $1,675 on the hourly chart of ETH/USD.
However, the price is currently facing resistance near the $1,720 zone, which is near the 61.8% Fibonacci retracement level of the downward move from the $1,784 swing high to $1,616 low. The next major resistance is near the $1,745 zone, and a close above this level might start another major increase.
If Ethereum fails to clear the $1,720 resistance zone, it could correct gains. In this scenario, the initial support on the downside is near the $1,680 level and the trend line zone, with the next major support near the $1,640 zone and the 100 hourly SMA. A break below $1,640 might cause the price to drop towards $1,615, and any further losses might call for a test of the $1,550 level.
The hourly Moving Average Convergence Divergence (MACD) for ETH/USD is now gaining momentum in the bullish zone, and the hourly Relative Strength Index (RSI) for ETH/USD is now above the 50 level.
However, the entire cryptocurrency market has been facing some headwinds in the past few weeks, with Bitcoin and Ethereum experiencing a sharp decline, wiping out billions of dollars of market capitalization. Concerns over regulation, market manipulation, and environmental impact have caused a dip in demand, leading to a correction in prices.
Despite the correction, the long-term fundamentals of Ethereum are still strong, with a growing network of decentralized applications (dApps), high demand for decentralized finance (DeFi), and the upcoming move towards a Proof of Stake (PoS) consensus mechanism, which is expected to reduce the energy consumption and improve the scalability of the Ethereum network.
Moreover, Ethereum has been gaining momentum with its recent network upgrade, which aims to reduce the gas fees and improve the user experience of the blockchain. The London hard fork upgrade is scheduled to take place in July 2021, introducing the EIP-1559 proposal, which would change the fee structure of Ethereum by introducing a base fee and a tip to miners.
The base fee would be burned, reducing the total supply of ETH, while the tip would be paid to the miners as an incentive. The proposal has been controversial, with some miners opposing it, while others welcome the change. The upgrade is expected to make Ethereum more accessible and reduce the cost of transactions, making it more attractive to users and developers.
In conclusion, Ethereum is showing signs of another leg higher, and it could gain bullish momentum if it clears the resistance zone. However, the cryptocurrency market is still facing headwinds, and there might be some volatility before the market stabilizes. Despite the short-term fluctuations, the long-term fundamentals of Ethereum are strong, and the network is expected to continue growing as a leading blockchain platform for dApps, DeFi, and other decentralized applications.
