Ethereum ‘has to bounce’ as ETH bulls pin $5K rally hopes on critical support channel

Ethereum’s native token, Ether(ETH), could experience a strong rebound as its price falls into a trading area with a history of attracting buyers.

Since October’s beginning, ETH’s price rebounds have been triggered by a rising trendline. This is part of a wider ascending channel range.

4-hour price chart for Ethereum/USD with ascending channel setup. Source: TradingView

Ether has thus been able to take advantage of pullbacks at its upper trendline. Its quarter-to-date returns are currently at 38%.

Recent sell-offs were limited by the rising trendline, which was instrumental in limiting them following Ether’s rally above $4,870. Analysts were able to predict a strong price rebound with a Forexn1 setup on TradingView calling to see a bull run to $5,000.

8-hour price chart for USD/ETH featuring “swing long”. Source: Forex1, TradingView

MacroCRG, an independent market analyst based on Twitter, stated that Ether “has got to bounce” because it holds the rising trendline support after the recent price pullback.

Pentoshi, another analyst, predicted a rebound, but discussed the possibility of corrections below this rising trendline. He stated in a tweet on Nov. 12:

“I would love to see alts go down by 20-30%. Usual bull run dip. It doesn’t matter if I want it, it just means it won’t happen. Please don’t be afraid to have your fears.”

As shown in the chart below, Pentoshi’s downside target for an extended price correction was close to $4,000

ETH/USD 4-hour chart showing the ascending channel’s bearish breakout target. Source: Pentoshi, TradingView

Support for ETH bulls by macro fundamentals

Ether’s ability limit price corrections, and then form new highs, seems to be more than technical.

Chris Weston, Pepperstone Financial Pty’s head of research, stated that fears of high inflation have fueled demand for potential hedging assets in the crypto market. This has led to Ether’s 500+ percent price rises and Bitcoin’s 130+ percent price surges in 2021.

Weston wrote in a note that crypto is the place to find fast money for investors.

Mike McGlone, a senior commodity strategist at Bloomberg Index, stated last week that he anticipates Ether to be worth $5,000. He said that portfolios consisting of a mix of bonds and gold will appear more naked if there is no Bitcoin or Ethereum.

Three #CryptoMomseers Drive $3 Trillion Market Capital – #cryptodollars represent a better way of transacting, a strengthening ecosystem, and here-to-stay assets class. They are the third leg of crypto-stool and the most important advancing part the digital-money revolution. pic.twitter.com/qhEOXttPW8
— Mike McGlone (@mikemcglone11) November 9, 2021

According to the analyst, Ether’s declining supply is a key bullish factor.

Namely, Ethereum’s August software upgrade, dubbed “the London hard fork”, implemented a code-change which started burning a portion the gas fees paid by miners via ETH. This effectively reduced the supply.

Related: The Ascending Channel Pattern and Ethereum Options Data Back Trader’s $5K ETH Target

According to Ultrasound.money data, the upgrade has seen the removal of more than 860,500 ETH, now worth more $3.2 billion. The Ethereum network is expected to burn 5.3M ETH annually at the current rate, compared to 5.4 Million ETH issued.

Source: Ultra. Source: Ultrasound.money

McGlone observed that a falling supply rate would keep Ether’s bullish course against rising demands.

As we see it, “Simply sticking with the course is more likely.” Ethereum joined Bitcoin, a cryptocurrency with a supply trend that is in decline according to code. The store-of-value is the first-born crypto, while the No. 2. is the DeFi building blocks.” All investments and trading moves involve risk. You should do your research before making any decisions.

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