Ethereum staged a notable price pullback alongside Bitcoin last week after the largest altcoin failed to break above its critical monthly resistance at $390. ETH was primarily weighed down by negative sentiment surrounding the cryptocurrency exchange OKEx suspending client withdrawals.
Bearish News Keeps ETH Below Resistance
The latest price action comes at a critical time for Ethereum since a breakout above $390 could set a strong bullish tone for the following days and indeed weeks to come.
However, the longer ETH struggles to penetrate above the $390 resistance zone; the downside risks may intensify, causing the cryptocurrency to slip back towards the $340 support area.
According to IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP), 1.37 million addresses have purchased 2.2 million ETH at an average price of $382 with a maximum price of $388. As such, this level has remained a critical area to watch for buying pressure.
However, trading volume needs to increase to facilitate an imminent break above the $390 resistance zone since ETH has been facing criticism over severe network congestion issues.
Fundamentals Paint Bullish Long Term Picture
Heath Tarbert, the chairman of the U.S. Commodities and Futures Trading Commission (CFTC), recently doubled down on his support for Ethereum due to its technological advancement.
“If Bitcoin is email, a one-trick pony…but obviously revolutionary, Ethereum goes far beyond that, it’s more like the internet.
When I think about DeFi, it’s obviously revolutionary & could lead to a massive disintermediation of the financial system.”
– @ChairmanHeath CFTC
— Ryan Sean Adams – rsa.eth 🏴 (@RyanSAdams) October 15, 2020
Along with Tarbert’s bullish commentary, recent news surrounding the ETH 2.0 Phase 0 rollout could catalyze a massive price surge in the near-term.
With infrastructure booming and scaling solutions on the rise, the fundamental outlook for Ethereum looks positive.
Additionally, cryptocurrency data analytics provider, Santiment recently tweeted that “Ethereum is seeing its highest level of unique addresses interacting on its network since May 2018 after a sudden influx beginning yesterday. This coincides with greatly reduced fees, likely a sign that traders are moving funds with less hesitance.”
The price continues to trade above $365, which is the neckline of a large inverted head and shoulders pattern on the weekly time frame and coincides with the ETH/USD pair’s 50-day moving average. This signal should be considered positive over the medium-term.
Should Ethereum successfully breach the $390 zone, a potential price explosion towards $475 could occur.
More so, the recent price pullback towards $365 could be the last chance to acquire the second-largest digital asset before the price moves into a much higher trading range between the $450 to $550 region.