In a previous analysis published at the beginning of Q3, we had predicted that after breaking $1700 resistance, ETH was expected to reach levels of $2000 over the succeeding trading sessions. Indeed, ETH successfully reached the $2000 mark. Let us analyze the clear patterns that helped us reach to an estimate of where ETH would end up.

The breakout was preceded by some consolidation seen at ETH’s 52 week lows. We had already marked a demand zone in this particular range of around $880-$1200. After consolidation, ETH breached the $1700 resistance level with considerable volume, which is a crucial metric to decide whether an impulse is a break-out move or not. Further, we saw 2 factors that gave us an expected price of $2000 for ETH. First, we saw a resistance level at $2000, and second, there was an expected supply zone at these levels, as marked in the chart.

ETH made a high of $2030, which is as close as it can get to our target of $2000. Due to selling pressures of a resistance and the supply zone, ETH saw a pullback. ETH recovered a bit and once again entered the supply zone. It must be noted that during this time, global cues were weak and extremely uncertain. Additionally, ETH was going to complete the ‘Merge’ during the same period, which led to even higher uncertainty. We have since seen a decline to around $1200 levels before ETH stabilized. 

During the last week of September and first week of October, ETH saw some consolidation in the $1200-$1400 range. The RSI is showing a slight uptick. If we see the RSI strengthening and increased volumes in consolidation, we can expect ETH to be trading above $1400 levels soon. Going forward, our position can be considered to be neutral with a slightly bullish tilt. This is because of extreme volatility due to multiple factors. 

With major economies struggling to fight inflation, central banks are getting aggressive with their interest rate hikes. Higher rates tend to redirect investment flows to bonds. Additionally, Ethereum has only recently completed the ‘Merge’, i.e., the shift from Proof of Work to Proof of Stake and we are yet to see the full long term effects of the same on the entire Ethereum ecosystem.

We advise traders/investors to proceed with extreme caution due to uncertain macroeconomic conditions, and enter trades with lower risk than their usual risk appetite.