Ethereum rallied just a bit Monday to show signs of life. Breaking above the $1100 level is positive, but one has to wonder whether or not any institutional money was involved, as the Americans were celebrating Independence Day. Because of this, Tuesday may tell the real story, so pay close attention to how the daily candlestick closes.
If we were to break above the $1250 level, that would be very bullish and more likely take this market much higher. In that scenario, I would anticipate an attempt to get back to the $1600 level, perhaps even the $1750 level after that. Anything above there would be a huge bonus, but I just don’t see that happening anytime soon. In fact, I think that once we reach the $1750 level, there would be plenty of people willing to jump out of the market in order to either break even or come close to it.
On a breakdown from here, I would be paying close attention to the $1000 level, and perhaps even more importantly the $900 level. $900 was the recent low, and breaking down below that would more likely than not send even more sellers into the market. In that scenario, the market almost certainly will go down to the $500 level, maybe even $400. It is worth noting that $400 being tested would make a “complete round-trip” of the rally that we have just seen. That is not uncommon for crypto markets, and in the environment we find ourselves in, I do not think there are a lot of people out there willing to throw a ton of money into this market.
That being said, if we get close to the $400 level I will start “stacking”, because the next run higher in crypto should produce even higher highs. In fact, I am actually hoping for this to happen so that I can pick up Ethereum “on the cheap.” In the meantime, short-term rallies are probably thought of as selling opportunities at the first sign of exhaustion, which we should see shortly after a surge higher. As long as the Federal Reserve remains tight with its monetary policy, there’s no real argument for this market going higher over the longer term. You should have plenty of time to accumulate if you are a longer-term investor.
