Ethereum Forms Golden Cross Again, Potential for New All-Time Highs
The 1-week ETHUSD chart has formed a golden cross for the second time this year. A golden cross is a bullish signal indicating that the trend is moving upwards. This pattern occurs when the 50-week moving average crosses above the 200-week moving average.
Historically, the last golden cross in December 2020 led to a massive 600% rally and Ethereum’s all-time high near $4,900. If a similar move happens this time, it could push Ethereum above $12,000.
Caution Needed: Not All Golden Crosses Lead to Upside
It’s important to note that not all golden crosses result in significant price increases. In 2023 alone, Ethereum has experienced both death crosses and golden crosses, showing that these patterns can be unreliable without an established trend.
Using the ADX to Confirm Trends
The Average Directional Index (ADX) is a tool used to measure trend strength on a scale of 0 to 100. By monitoring the ADX, traders can assess the validity of moving average crosses. As the 1-week ADX approaches or exceeds 20, it confirms growing momentum and reduces the likelihood of whipsawing price action.
Although the current ADX for ETHUSD is not yet above 20, it is approaching this key level. Once it surpasses 20, it will provide more credibility to the golden cross signal.
Hot Take: Ethereum’s Golden Cross Signals Potential Bull Run
The formation of a golden cross on Ethereum’s 1-week chart suggests a potential bull run with the possibility of new all-time highs. However, caution is needed as not all golden crosses lead to significant price increases. Monitoring the Average Directional Index (ADX) can help confirm the strength of the trend. If the ADX surpasses 20, it will provide more validity to the golden cross signal. Traders should exercise caution and wait for high-conviction signals before entering positions based on moving average crosses.
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