Bitcoin (BTC) is currently approaching $ 40,000 after seeing massive gains in the first seven days of 2021. This is a 100% increase from the previous record level in December 2017. In other words, the price levels it took Bitcoin three years to recover. now earn nearly doubled in a matter of weeks.
Meanwhile, the price of Ether (ETH) has increased by more than 100% in three weeks. However, it has yet to break its all-time high of around $ 1,420 on January 13, 2018.
Therefore, the primary question is whether altcoins will underperform, keep up, or outperform BTC in the near term. Let’s take a look at the ETH price charts to get an idea of where this “altseason” might be heading in the short term.
Ether hits the second Fibonacci level for a potential top
The three-day chart for Ether is with a vertical rally in the past weeks, reaching several important levels. In this case, the Fibonacci extension tool is helpful in determining the next potential top.
Often times, this indicator is used to determine different top structures in price discovery, but it can also be used to measure the likely strength of the next impulse movement.
In this case, the recent peak of the momentum movement was $ 470. The current low was $ 90 in March 2020. Based on that information, the Fibonacci 1,618 level was found at $ 750, while the 2,618 Fibonacci extension was $ 1,150. The latter also coalesces with the highest region of all time, in which Ether is currently located.
The next higher lowest puts $ 2,700 in play
The weekly chart must be placed on the logarithmic scale to make this analysis. However, if the Ether chart tops out in the near future (it could also be after rallying towards $ 1,500 and a new record high), the same Fibonacci extension could be pulled on the recent momentum move.
The current high is $ 1,230 while the recent low is $ 310. Thus, the Fibonacci extension finds potential top structures at $ 1,800 and $ 2,700-2,800.
The higher the current impulse wave goes, the greater the prospects for a new rally.
What levels of support are critical?
The weekly chart shows that the market is accelerating. However, investors and traders should anticipate a possible correction once nothing goes up in a straight line.
In that case, Fibonacci can also be used to define support areas. The primary support zone to test is the region between $ 775-825 which is the 0.35-0.382 Fibonacci level. This support zone coincides with the rejection of that level in April 2018.
If that level doesn’t offer enough support, a further correction towards the order block around USD 600 is likely. Such a correction would be hugely painful for the market and cause the price to drop by more than 50%, which seems unlikely at this point.
Important short term support for ETH / USD
The graph with the lower timeframe shows a clear increase, with the drawn trend line continuously serving as support.
In that way, the trendline itself is a huge indicator of further up and down momentum. If this trendline cannot provide support, downward pressure seems inevitable.
In that case, if the trendline does not hold, the USD 1,120-1,130 should hold. If not, Ether is back in the previous range with a $ 950 test on the cards.
However, the bullish case is new all-time high for the price of Ether if this trend line remains intact.
The views and opinions expressed here are solely those of the writer and do not necessarily reflect Cointelegraph’s opinion. Every investment and every trade move carries risks. You should do your own research when making a decision.