Chief Market Strategist Watching Possible W-Bottom Formation In Ethereum
According to a chief market strategist, Ethereum could form a possible w-bottom, an indicator that usually suggests a bull market.
Strategist: Ethereum Might Form A “Higher High”
In a call with MarketWatch, Matt Maley has said that ETH could be moving in a bullish direction if certain conditions are met.
Maley is a chief market strategist at Tabak and Co., and during the call with MarketWatch, the strategist has talked about Bitcoin and Ethereum.
According to Maley, the 200 Daily Moving Average (DMA) is an important level, breaking above which would be bullish for the crypto. At the moment, this value is around $2,141, something ETH has already broken.
Ethereum could then go on to break $2,880, the same value as the high from late May-early June, to form an indicator called the “higher high”. The crypto has already formed “double bottoms” and a minor higher high.
ETH only needs to form a more important higher high now. According to Maley, something like this would be “particularly bullish” for the cryptocurrency.
However, one thing to note is that ETH is somewhat overbought right now, based on the Relative Strength Index, which is an indicator that measures the ratio of the recent losses to recent gains.
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When ETH is said to be overbought, it means the cryptocurrency is believed to be trading above its fair value. Investors “overbuy” without any investment rationale, and the price goes up. Usually, a phase of overbought is followed by a selling period.
At the time of writing ETH’s price floats around $2.6k, up 12% in the last 7 days. Over the past month, the cryptocurrency has amassed 19% in gains.
Below is a chart that shows the trend in the price of Ethereum over the last 6 months.
ETH continues to enjoy the upwards trend | Source: ETHUSD on TradingView
As the graph shows, the crypto has been on an uptrend since 20 July. On a closer examination of the graph, it becomes apparent that the coin seems to be forming a “W” where the first peak was the earlier mentioned $2,880 point, with the first bottom following soon after in the third part of June.
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After that, ETH forms a smaller peak early July, and another bottom on the aforementioned 20 July. Now, if ETH continues to follow the uptrend, it will return to the point of the first peak. This is the important “higher high” that’s needed for a bullish trend.
However, it’s unclear whether Ethereum can break that level as the crypto is slightly overbought right now. The price could go down if investors decide to sell before the higher high is made.