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Ethereum (ETHUSD) Technical Analysis: Channel Breakout and Consolidation

Ethereum appears to have broken outside its long-term descending channel but is still stuck in its symmetrical triangle consolidation pattern. This suggests that there’s still a chance that the selloff might still resume at some point.

Besides, technical indicators are reflecting the presence of selling pressure as well. The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse.

The gap between the indicators is also widening to signal strengthening selling pressure. In that case, ethereum could still drop inside the channel and resume its slide to support. Stochastic is heading south so price could follow suit while sellers have the upper hand. Meanwhile, RSI is moving sideways to reflect range-bound action.

Ethereum also seems to be waiting for more catalysts to spur a strong breakout in either direction. There are a lot of factors pulling cryptocurrencies in opposite directions, among which is the expected pickup in institutional investment by early next year.

This is due to the launch of Fidelity’s institutional platform for bitcoin and ethereum, which would make it more accessible to banks and hedge funds whose clients wish to invest in the industry.

On the flip side, there is quite a bit of risk aversion in play in the financial markets, owing mostly to geopolitical risks in Europe. Tensions between the US and Saudi Arabia, as well as with China, are also discouraging traders from taking on more riskier assets.

For ethereum, in particular, the delay of its network upgrade has also kept this digital asset in limbo as investors are waiting to get more details on what the issues are. This hard fork would contain a lot of benefits for the network and is therefore expected to lead to price gains, but traders would have to wait a bit longer.

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