Ethereum price is set for a major breakout and hitting as high as $330 next shouldn’t be ruled out.
Recently, several altcoins have been showing strength. A few good examples are Theta Token (THETA), Zilliqa (ZIL), and Elrond (ERD). However, the large caps are lagging heavily and the only large-cap performing well has been Cardano (ADA).
As smaller cap altcoins begin to lift off, some investors might be wondering exactly what is needed for a significant surge in the large caps? Does the market need confirmation from Bitcoin (BTC), the top-ranked digital asset on CoinMarketCap, or is the top altcoin Ether (ETH) the signal?
Crypto market daily performance. Source: Coin360
Ether holds crucial $220 support level
ETH/USD rallied from $195 to $250 in the last month but it also corrected alongside Bitcoin in the previous days. As Bitcoin price pulled back this week, Ether endured a test and the green area between $271-$222 is the zone that needed to hold as support.
ETH/USDT 1-day chart. Source: TradingView
As shown on the chart above, the bounce succeeded and confirmed that the $217-$222 level is a support level, whereas it was resistance throughout May.
The chart is also showing an apparent resistance at the $250 level, where a range appears This range has support between $217-$222 and resistance at $250. As the range is determined, the conclusion can be drawn that a breakout leads to a trend.
ETH/USD has been in an uptrend since the crash on March 12, after which it’s more likely to see further upside above $250.
The next primary resistances can be found at $290 and $330-$340. If the price drops below $217, a potential support test of the 100-day and 200-day Moving Average can be expected at $168-$176.
ETH/USD 1-day chart. Source: TradingView
The bigger picture is showing a clear accumulation period for ETH/USD; and since July 2018, the price of Ethereum has been hovering between $100 and $300 — a range of two years — ready to break out.
The longer such a range sustains, the heavier the breakout likely becomes. Additionally, such a long accumulation period warrants an excellent risk/reward opportunity as well.
What’s crucial in this chart? The 100 and 200-day MA are beneath the current price, which warrants support and warrants further upwards momentum.
Another argument for further gains comes from the increased volume inside this accumulation. As is often said, volume precedes price, through which accumulation is often spotted by an increase in volume. Ether is currently showing this signal.
Total market cap shows an increased interest in cryptocurrency
The total market capitalization of cryptocurrencies is showing a clear breakthrough in the 2018 support level. The $215-$222 billion levels have been support earlier in the cycle and have again flipped to become support.
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
Similar cases are found in the market capitalization and ETH/USD charts. Increasing interest through rising volume is also a signal that accumulation is taking place.
The 100 and 200-day MA are beneath the current market capitalization, signaling that the market capitalization is currently moving into bullish territory.
The main priority for the total market capitalization would be a breakout above the $305 billion resistance as that would indicate a new higher high and another positive bullish argument for the start of a massive new cycle.
Total altcoin market capitalization lags heavily
Total altcoin market capitalization cryptocurrency 1-day chart. Source: TradingView
The altcoin market capitalization is showing a definite accumulation period, as the altcoin market capitalization has been hovering between $50 and $113 billion. As accumulation ranges come to an end, the climax is approaching for the total altcoin market capitalization as well.
What’s crucial again is that the 100 and 200-day moving averages need to provide support in the same way they did throughout the entire cycle before the peak in December 2017.
If that happens, a breakout is likely above $113 billion and a sustainable rally towards $135 or even $200 billion. To date, the resistance at $113 billion has been tested several times.
As a rule, the more a resistance gets tested, the weaker the level becomes. Another test would likely create enough strength for a breakthrough and a surge to the upside.
In that regard, $200 billion is not an impossible level to expect in the next rally.
ETH/BTC is compressing
ETH/BTC 1-day chart. Source: TradingView
The ETH/BTC chart is currently showing compression but what does this mean? Basically, it means that the price is moving within narrowing ranges and as the price moves inside these narrow ranges a breakout typically results in a heavy volatile move.
In the case of Ether, it’s likely to expect this breakout to occur to the upside. A similar accumulation range is happening here, through which the BTC pair is hovering above the 100 and 200-day MA.
As long as these levels sustain support, a breakout to the upside is likely to occur. The next areas to watch are 0.029-0.03 sats and 0.036-0.04 sats.
The levels to watch on the USD pair
ETH/USD 1-day chart. Source: TradingView
The most likely scenario is shown in the chart above. As the previous resistance of $217-$222 is confirmed as support, a continuation to the upside is likely to occur.
As discussed earlier, the previous rally to $215 showed that consolidation is the most likely occurrence here. In this consolidation, strength can be gathered before the next massive impulse wave starts.
Once Ether price breaks above the $250 barrier, further continuation towards $290 and $330 are on the tables. In this case, the major resistance area to watch is at $330.
On the flip side, if Ether price drops below the support level of $217-$222, a downward continuation is likely. The final support is the 100 and 200-day MA area around $175-180.
This zone has to remain a support in order to sustain further upwards momentum. Otherwise, retests of $100 can even become likely.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.