Ethereum Bounces Back After Reaching 214-Day Low
The price of Ethereum (ETH) has been on the rise since hitting a 214-day low on August 12. This bounce is significant because it confirms a long-term bullish divergence in the daily Relative Strength Index (RSI), which is a momentum indicator. So, what does this mean for the future price of Ethereum?
The Descending Parallel Channel
Looking at the daily time frame chart, we can see that the ETH price has been decreasing within a descending parallel channel since April. The breakdown from the $1,650 support area led to a low of $1,521 on October 12, marking the lowest price in 214 days.
Bullish Divergence in RSI
However, since then, the Ethereum price has been increasing. This movement was preceded by a bullish divergence in the daily Ethereum RSI. This indicates that despite the price decrease, there was an increase in momentum.
Understanding RSI as a Momentum Indicator
The RSI is a useful tool for traders to determine whether a market is overbought or oversold. If the RSI reading is above 50 and trending upward, it suggests that bulls have an advantage. Conversely, if the reading is below 50, it indicates a bearish trend.
Rare Bullish Divergence Signal
The recent bullish divergence in Ethereum’s RSI is quite rare. Looking at historical data, we can see that the RSI value reached its lowest point of 20 since December 2018. Extremely oversold values like this often indicate a price bottom.
Predictions for Ethereum’s Future
While there are concerns about Ethereum’s future trajectory due to the ongoing price decrease and low gas fees, analysts from Standard Chartered bank have predicted that the ETH price will reach $8,000 by the end of 2026. They also suggest a long-term valuation between $26,000 and $35,000 for the cryptocurrency.
Next Steps for ETH Price
Based on the RSI readings and price action, it is likely that Ethereum’s price will continue to rise. The descending parallel channel is considered a corrective pattern, so an eventual breakout is expected. If this happens, the Ethereum price could increase by 33% and reach the $2,100 resistance area.
Hot Take: Bullish Momentum Returns for Ethereum (ETH)
The recent bounce in the Ethereum price after reaching a 214-day low is a positive sign for investors. The bullish divergence in the daily RSI indicates a shift in momentum and suggests that Ethereum may be poised for further gains. While there are concerns about the overall market conditions and gas fees, analysts remain optimistic about Ethereum’s long-term potential. If the current trend continues, we could see Ethereum reaching new highs in the coming months.
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