- The Ethereum market pulled back a bit on Tuesday to show signs of selling pressure.
- The $1800 level is an area that extends to the $2000 level and has been a major resistance barrier previously, as well as a major support level.
- “Market memory” comes into the picture and should continue to affect how the market moves.
Risk Appetite Suggests Positivity
Ethereum has gotten a bit of a boost over the last couple of weeks as the risk appetite has gotten better, and of course, the network is starting to get close to a major upgrade. This suggests that the market is more likely than not going to be seeing more use, but whether or not that actually happens is a different situation altogether.
Underneath, the 50-day EMA should be supported, near the $1325 level. The $1200 level underneath there is the top of the previous consolidation area, so I do think that it’s an area that a lot of people would be paying close attention to because it also would have a lot of “market memory” going forward. The market breaking down below the $1200 level opens up the possibility of a move down to the $900 level. Anything below the $900 level opens up a massive amount of selling pressure that could cause the Ethereum market to collapse down to the $400 level.
If the market were to break to the upside and continue to show bullish behavior, clearing the $200 level opens up the possibility of a big move higher, and more likely than not would kick off a longer-term uptrend. At that point, I’d be looking for Ethereum to go to the $4000 level, but I don’t think that happens very quickly.
The only thing that you can count on in this market from what I can tell is going to be volatility. Because of this, you need to be very cautious with your position sizing unless, of course, you are looking to build a longer-term position. I think that a pullback at this point in time makes quite a bit of sense and could allow traders to slowly build up a bigger position that believes in the longer-term efficacy of Ethereum, and whether or not the demand will continue to pick up for the network. Longer term, it does look very interesting, but that does not necessarily mean that you need to go “all in” at this point.
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