Ethereum has been consolidating for the last three trading days after buyers failed to break above key short-term resistance near the $420 level.
Now, on-chain analysis reveals that buyers are preparing for a second attempt.
Ethereum Prepares to Break Out
ETH did, however, manage to break above the $400 resistance level last week, following PayPal’s announcement to allow its nearly 350 million users to buy and sell cryptocurrencies on the platform.
Technically, Ethereum remains bullish while trading above its 50-day moving average, around the $380 support area. This support has acted as an important price barrier this month.
The price is currently capped inside a $400 to$420 range, implying that the second-largest crypto may now be in a period of accumulation before a possible bullish explosion towards the $450 to $475 resistance zone.
Still, ETH may face a minor price correction around the $400 to $390 support zone this week if bulls fail to break through the $420 resistance zone in early-week trade.
One major silver-lining for Ethereum bulls is the cryptocurrencies on-chain data, which appears to be supporting further price appreciation. Traders should also consider that ETH has been lagging BTC in terms of gains recently and may start to play catch up this week.
A recent rise in exchange inflow balance indicates that large Ethereum holders are interested in buying at the current market price.
This activity also coincides with the increasing number of active addresses over the last 24 hours.
A surge in recent transaction volumes indicates a higher probability of a large incoming price movement, highlighted in the chart below.
This is a positive occurrence and adds credence to the idea of further bullish momentum if the price breaks above the $420 resistance zone this week. However, a failure to break that zone could lead to yet more price consolidation in Ethereum right up to the U.S. election day on Nov. 3.
Alongside this recovery in transaction volumes, the network’s hashrate is holding steady as miners continue to rally behind Ethereum’s bullish fundamental outlook. Additionally, confidence in a near-term bull rally grows, as transaction volumes recently hit a new six week high.
As well as the outlined technicals and on-chain data points, investors are beginning to price in the launch of ETH 2.0, a critical upgrade that would improve Ethereum’s ability to scale.
Furthermore, the inevitable release of more U.S. stimulus after the upcoming election is also likely to improve the chances of further price appreciation for the second-largest cryptocurrency over the medium to long-term.
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