Is Ethereum Heading Toward $2,300? Here's What The Chart Suggests

Ethereum ETH/USD shot up almost 5% during Friday’s 24-hour trading session before the move higher was thwarted by a bearish day in the general markets that saw the S&P 500 sliding 0.8%.

The crypto’s surge may have been due to algorithms recognizing a bull flag pattern had developed on Ethereum’s chart.

The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines or into a tightening triangle pattern.

• For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
• For an entry, bullish traders will want to watch for a break up from the upper descending trendline of the flag formation on high volume. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.

A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole.

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The Ethereum Chart: Ethereum’s bull flag pattern was developed between July 13 and July 21, with the pole formed over the first seven 24-hour trading sessions within that time frame and the flag created over the two sessions that followed. If Ethereum breaks up from the pattern again on higher-than-average volume, the measured move is a whopping 62%, which suggests the crypto could soar toward $2,300.

• The break up from the bull flag wasn’t sustained, likely due to lower-than-average trading volume. At press time, Ethereum’s volume on Coinbase was measuring in at about 218,000 compared to the 10-day average of 381,596. Low trading volume on a break from a pattern can mean that either the formation wasn’t recognized or that more time within the pattern is needed before the true break occurs.
• If the bull flag isn’t recognized over the coming days, Ethereum is also trading in an uptrend pattern, which was confirmed to still be intact on Friday. Ethereum’s most recent confirmed higher high within the pattern was printed on July 19 at $1,631.32 and the most recent higher low was formed at the $1,318.79 mark on July 17.
• If Ethereum closes the trading session near to flat, the crypto will print a doji candlestick, which could indicate lower prices back within the flag formation are in the cards. If high volume comes in to break the crypto up to close near the high-of-day, Ethereum will print a bullish Marubozu candlestick, which could indicate higher prices are on the horizon.
• If the crypto closes the 24-hour session at its low-of-day price, Ethereum will print a shooting star candlestick, which could indicate lower prices will come over the weekend.
• Ethereum has resistance above at $1,717.41 and $1,957.24 and support below at $1,421.80 and $1,245.

See Also: We Finally Have A Date Set For Ethereum's Merge
Photo: Visual Generation via Shutterstock