Ethereum breaks out of a bullish continuation pattern
An attempt to the pivotal $2,000 level is the path of least resistance
A short squeeze might follow should the market trips the stops above the pivotal level
Ethereum’s bullish momentum continues as the price breaks out of a bullish continuation pattern – an ascending triangle or a pennant formation. In both cases, the implications are that the market will try its hand at the $2000 level (again) after failing to overcome resistance late last summer.
The strength in the cryptocurrency market is unsurprising, given how the US dollar performed against its G10 peers. For example, EUR/USD strengthened from 1.05 to 1.10 since March 15, as the US dollar’s momentum faded. GBP/USD is another example, as it currently trades around 1.25.
From a technical perspective, it is more likely that Ethereum will try to overcome resistance at $2,000 than not. So is it time to buy it in advance? If so, what are the proper levels to consider when setting the risk-reward parameters?
Ethereum chart by TradingView
More strength should lie ahead for Ethereum
In March, Ethereum ended the month on high heels. It formed a bullish continuation pattern that resembles an ascending triangle formation.
Such a pattern is made of consolidation below horizontal resistance. When the market breaks above resistance, the measured move equals the longest segment in the triangular formation.
But the continuation pattern could easily be interpreted as a pennant. If that is the case, then the measured move, seen in orange on the chart above, points to $2,300.
Under such a scenario, the market will trip stops above $2,000 and keep running high. Therefore, the best way to trade this setup is to place a pending buy-stop order just above $2,000 with a stop at $1,800 as the price action should not return to the consolidation area again. As for the target, the conservative trader should book half of the profits at $2,300 and trail the stop for the remaining half.
