Over some days, the price of Ethereum has been in a consolidation zone, moving between $3,949 and $3,627. This is a result of the rally that happened a few days ago which led to the crypto asset’s price making over 10% movement on the upside.
When prices are consolidating, it can only be considered that it is building momentum to either break above the consolidation zone or below it. At this point, we cannot tell the next action the price will take.
In this article, we will see the possible outcome if there is a break out from the consolidation. As of the time of writing, the price of ETH was up by 0.66%, trading around $3,752 above the 100-day Simple Moving Average (SMA) in the last 24 hours.
Ethereum On The 4-Hour Chart
Looking at Ethereum’s chart on the 4-hour timeframe, it can observed that the price is trading above the 100-day moving average, suggesting ETH’s price is on a bullish trend and could break above the consolidation zone.
Also, with the help of the MACD indicator, although the MACD histograms are trending below the MACD zero line, these are already showing signs of weakness as the histogram color is becoming faint.
The MACD line and the MACD signal line are also seen moving toward the MACD zero line but as long as they are still above the zero line, there could be a possible reverser.
With this MACD formation, it could be suggested that the price of Ethereum is still bullish and there is a possibility it could break above the consolidation zone
Finally, using the Relative Strength Index (RSI) also to analyze the price action in the 4-hour timeframe, it can be seen that the RSI line is attempting to back up after failing to cross below the 50 lines, suggesting that the price is still bullish.
Possible Outcomes If There Is A Breakout In Either Direction
Conclusively, if there is a break out above the consolidation zone, the price of ETH might continue to move upward toward the $4,094 resistance level. Should the price surpass this resistance level, it might move further upward to create a new high for the year.
On the contrary, if Ethereum breaks below the consolidation zone, the price might begin to move toward the $3,263 support level. A breakout below this level might cause a continuous downward movement toward the $2,864.04 support level.
Featured image from iStock, chart from Tradingview.com
