ETHXBT formed a double bottom formation visible on its 4-hour time frame as it failed to break below support around 0.00800 in its last two attempts. Price also had trouble making it past the neckline as it pulled back upon breaking higher and consolidated, but it looks like it’s gaining stronger bullish momentum from here.
Bitcoin price has been on the back foot ever since Chinese regulators started cracking down on cryptocurrency activity in the mainland, prompting exchanges to introduce restrictions such as ceasing margin account offerings, charging higher transactions costs, and halting withdrawals temporarily. This has dampened demand for bitcoin in the mainland and all over the world as investors are wary that the investigations could go further and eventually lead to tighter regulations.
Ethereum has since been able to take advantage of this, especially since developers are working on an upgrade on the network. According to analysts, this was spurred by a strong pickup in trading volume as investors might be looking into other digital currencies other than bitcoin for now. The highly leveraged market also helped magnify gains as exchanges reported that short interest declined significantly lately.
Another factor that contributed to higher ethereum prices is the report issued this week indicating that big banks like JP Morgan, Santander and BNY Mellon are looking to join the ethereum project. This also includes firms like Microsoft, Cisco, CME Group, and British Petroleum. More updates on this project could drive ethereum demand higher compared to its altcoin rivals.
The 100 SMA is still below the longer-term 200 SMA on this time frame, though, so the path of least resistance could be to the downside. However, the moving averages appear to be oscillating and have yet to take the recent upside break into account. Stochastic is indicating overbought conditions and is turning lower so price might follow suit. RSI is also in the overbought territory and is pointing down, possibly drawing some sellers to the mix.
In that case, ETHXBT could make a correction to the broken resistance around 0.01200 to gather more bullish energy before heading further north. Price might aim for the next area of interest around 0.01500 to 0.01600 then onto the 0.02000 highs.