ETH - two possible scenarios post EIP-1559

BINANCE:ETHUSDT   Ethereum / TetherUS
Hello all,

It's been a long time since I last posted something, but that doesn't mean I was out of the markets. On the contrary, but I needed some time focus on some side activities in and out of crypto and those consumed my time.

ETH was performing really great since it last touched $1,700 two and a half weeks back. It is now flying on the expectations that the upcoming London upgrade, also known as EIP-1559 will bring significant improvements to the fees structure (introducing a base fee) and implement a ETH burning mechanism which in times of big network utilization will make the Ethereum token deflationary. So, whales and retail were accumulating as the long-expected upgrade is scheduled for today, August 5.

If we zoom out a little bit, to the Weekly chart, there are few things to notice

First is that we are basically at a major weekly resistance. This was the peak of the May/June relief bounce after the market crash when the ETH/USDT pair recovered above the 21 EMA . We are now again above that indicator, but also flirting with the same horizontal level in combination with the Fibonacci 38.20 mark and all this after two and a half weeks of uninterrupted green wave.

If we go back to 2017 and the last major bull cycle, we will see the exact same picture in the upside reversal which the ether experienced in May 2018. Fibonacci 38.20 + horizontal resistance after breakout above the 21 EMA on the weekly timeframe . So, if history repeats itself, we are to see major bearish reversal.

"But...this time fundamentals are on buyers's side". Are they ? And are fundamentals to be trusted AT ALL ? I would prefer to look at the charts solely, isolating the outside noise.

The full breakout here can be confirmed with a weekly candle close above $2,920.

Going down to the Daily timeframe

We have a W-pattern, which in most of the cases is a bullish signal for a solid reversal in the trend. But this figure has it starting point at the same place where the end-of-May relief bounce ended - at the $2,850-$2,900 horizontal resistance. So, until the ether breaks and closes above it, we cannot consider the W as fully formed, which means a reversal at where we are now ($2,700), will invalidate it. Then we will have a fakeout and a bears will surely step in. This combined with the relatively low volumes is a recipe for disaster in the mid-term.

My guess is that we ill see one more impulse up which will be critical for the mid-to-long-term direction of ether.

Stay safe


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