Ethereum surged above the $3,000 level of resistance over the weekend as it looks to complete a full recovery from January’s plunge to $2,160.
Despite the recent rally, the world’s second largest cryptocurrency remains in a downtrend on all higher timeframes. This will only be confirmed as a reversal with a daily close above $3,400.
It is expected that Ethereum will come back down to test the broken $2,890 level of resistance as a new base of support, which would coincide with Bitcoin sliding back down to between $40,500 and $41,000.
From a technical perspective, Ethereum’s relative strength index (RSI) hit a low of 21.45 on January 25, indicating it was in a deeply oversold posture. The RSI hadn’t been that low since the Covid-inspired crash of March 2020.
There is still a feeling of cautious sentiment surrounding this recent rally as there hasn’t been a clear news catalyst to drive price action to the upside.
If Ethereum can break above $3,400 on convincing volume, it could well trigger a macro reversal and present opportunities for a new all-time high in the later stages of 2022.
However, traders will be on guard for a potential lower high, which would bring around eventual downside targets of $2,000 and $1,700.
Buterin had proposed that Bitcoin needed a scripting language. He decided to develop a new platform with a more general scripting language when he couldn’t get buy-in to his proposal.
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