Let’s take a look at Ethereum forecast. Technical analysis starts with a price chart and is inextricably linked to it. Even a beginner would think first to look closely at the trading platform in search of patterns. Strange as it may seem, they are really there. The chart is a kind of language, akin to the language used by mathematicians. A professor of any country can easily understand the images of parabolas and universally written formulas. It’s the same with traders and analysts all over the world. They have developed their own language, thanks to which they “read” trading signals and make deals depending on their trading strategy. This is what technical analysis is.
Technical Analysis #1
Ethereum (ETH) has been actively strengthening since April 23, but the price is probably approaching a local high. At the moment, ETH appears to be in the sub-wave of wave 5. Accordingly, it is likely that the growth phase launched in March 2020 is coming to the end. A number of Fibonacci levels converge in the area between $4585 and $4710. This makes this area a likely top of the current move. We calculated the target area using the Fibo projection levels applied to cyclic waves and sub-waves 1-3, as well as the external correction of wave 4. In case the move expands, the next most likely target of the bulls will be the level of $5171. However, this scenario is unlikely.
Technical Analysis #2
An additional signal for the ETH/USD quotes decline during the current trading week of May 24-28, 2021 will be a test of the trend line on the relative strength indicator. The second signal will be a rebound from the lower boundary of the bull channel. The strong growth and breakdown of 3405.05 will cancel the option of the cryptocurrency value decrease at the current trading week. It will indicate the breakdown of the resistance area and continuation of the ETH/USD quotes rise with a potential target above the 4505.05 level. The cryptocurrency Ethereum decline will be confirmed by the breakdown of the support area and closing of the quotations below the 1885.05 level.
Thus, Ethereum forecast suggests an attempt to test the resistance area near the level of 2955.05. From there, it is worth expecting a rebound and continuation of the cryptocurrency fall to the area below the level of 1305.05. An additional signal in favor of Ethereum rate decrease will be a test of the trend line on the relative strength indicator. The strong growth and breakdown of 3405.05 area will be a cancellation of the downside option. In this case, the continuation of the rise with the target above the 4505.05 area should be expected.
The purpose of technical analysis
Conducting a technical analysis of the cryptocurrency or any other market means determining the current trend and confirming your predictions regarding further price movement using various graphical tools. As a result of these manipulations – to determine the right moment for a deal. Thus, the goal of technical analysis is to see the rationale for opening a position on the chart itself.