For a few days, the price of Ethereum it was in a consolidation zone, moving between US$3,949 and US$3,627. This is a result of the recovery that occurred a few days ago, which caused the price of the cryptographic asset to show an upward movement of more than 10%.
When prices are consolidating, it can only be considered that they are building momentum to break above or below the consolidation zone. At this point, we cannot say what action the price will take next.
In this article, we will look at the possible outcome if there is a consolidation breakout. At the time of writing, ETH price is up 0.66%, trading around $3,752 above the 100-day simple moving average (SMA) over the last 24 hours.
Ethereum on the 4-hour chart
Looking at the Ethereum chart on the 4-hour time frame, it can be seen that the price is trading above the 100-day moving average, suggesting that the price of ETH is on the rise. optimistic trend and could break above the consolidation zone.
Furthermore, with the help of the MACD indicator, although the MACD histograms are trending below the MACD zero line, these are already showing signs of weakness as the color of the histogram becomes weaker.
The MACD line and MACD signal line are also seen moving towards the MACD zero line, but as long as they are still above the zero line, there could be a possible reversal.
With this MACD formation, it can be suggested that the price of Ethereum is still on the rise and there is a possibility of breaking above the consolidation zone.
Finally, using the Relative Strength Index (RSI) also to analyze the price action on the 4-hour time frame, it can be seen that the RSI line is trying to pull back after failing to cross below the 50 lines, suggesting that the price is yet optimistic.
Possible outcomes if there is a breakout in either direction
Conclusively, if there is a breakout above the consolidation zone, ETH price could continue to rise towards the $4,094 resistance level. If the price breaks this resistance level, it could rise further to create a new high for the year.
On the contrary, if Ethereum breaks below the consolidation zone, the price could start moving towards $3,263. support level. A break below this level could cause continued downward movement towards the $2,864.04 support level.
Featured image from iStock, chart from Tradingview.com