Ethereum’s price action has been incredibly strong throughout the past day, with bulls posting a sharp overnight upswing that helped end its severe underperformance of BTC seen throughout the past few weeks.
ETH’s upswing today also rekindled life into many altcoins that had previously been bleeding out, with the DeFi sector, in particular, seeing immense strength as a result of today’s ETH rally.
That being said, the cryptocurrency still is trading below a key resistance level that bulls have been struggling to surmount.
If this level continues holding strong, it could spark a strong selloff that puts a firm end to the cryptocurrency’s recent upswing.
One trader is now pointing to a few factors that make Ethereum’s current price region a “questionable place to buy.”
He notes that it is currently navigating towards a strong weekly resistance level that could spark a sharp selloff, as well as a bearish divergence emerging on its weekly chart.
He also explained that any retrace towards $420 will be a perfect opportunity to buy-in.
Ethereum Sees Strong Overnight Rally as Bulls Take Control
Ethereum has been caught in the throes of an intense bout of consolidation throughout the past few weeks, with its price previously unable to rally despite Bitcoin’s parabolic move higher.
However, this trend has shifted over the past few hours as the crypto saw a massive overnight rally that sent its price rocketing up to highs of $450.
This level has proven to be strong resistance, and a rejection here caused it to retrace down towards $440.
It is now consolidating as bulls try to muster up enough support to shatter its overhead resistance. A break above this level would be technically significant and lead to further upside.
Analyst: ETH Could Retrace Towards $420 Before Rallying Higher
While sharing his thoughts on where Ethereum might trend in the near-term, one analyst explained that he is now watching for the cryptocurrency’s reaction to its overhead resistance at $450.
He notes that the selling pressure here, coupled with bearish divergence, makes this a “questionable place to buy.”
“ETH: Uber-bullish tweets for ETH today, let’s see. Currently at weekly resistance, questionable place to buy. $421 is for buying (be careful of a BTC nuke though). Otherwise, I’ll miss the $50~ price move and hop in on weekly S/R retest once broken. Weekly bear div btw,” he said while pointing to the below chart.
Image Courtesy of Chase_NL. Source: ETHUSD on TradingView.
The coming few days should provide some serious insights into Ethereum’s mid-term outlook, as its reaction to $450 is vital for understanding its mid-term trend.
Featured image from Unsplash. Charts from TradingView.