Source: PaxForex Premium Analytics Portal, Fundamental Insight
While the price of Ethereum enjoyed a bullish period, it faces two primary issues that may steal its tailwind, at least in the medium-term. Users of the Ethereum blockchain face congestions issues and sky-high gas prices, the fee users must pay for transactions. The upcoming Berlin upgrade may not provide the long-term relief many users require. After the average transaction cost peaked just above $39, it retreated but presently remains at a punishing $16. Developers and projects relying on micro-transactions face charges that make their projects unprofitable. An exodus to better alternatives ma once the Berlin upgrade fails to deliver a sustained decrease in gas fees.
Adding upside pressure on Ethereum transaction costs is the rise of nonfungible tokens or NFTs. Ethereum has reached a point where its blockchain may be broken beyond repair. Other projects offer low-cost transactions and scalability today, which is likely to siphon users away from Ethereum moving forward. For now, it continues to enjoy the biggest developer base and dApps, but if complacency sinks in, Ethereum is on its way down the rankings, dragging price action with it. The risks for Ethereum, especially near current prices, outweigh the rewards.
The forecast for the ETH/USD remains bearish after the advance lost momentum and price action failed to push above its previous peak. It settled for a lower high and entered a sideways trend with bearish tendencies. The Kijun-sen and the Tenkan-sen also turned flat, together with the Ichimoku Kinko Hyo Cloud. Adding to bearish developments for this cryptocurrency pair is its CCI, which gradually decreased and moved out of extreme overbought territory with more downside potential. Will bears take control of the ETH/USD and force a correction into its next horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the ETH/USD remain inside the or breakdown below the 1,753.75 to 1,838.20 zone, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,791.00
- Take Profit Zone: 1,269.00 – 1,395.00
- Stop Loss Level: 1,892.00
Should price action for the ETH/USD breakout above 1,838.20, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,892.00
- Take Profit Zone: 1,969.00 – 2,000.00
- Stop Loss Level: 1,838.20
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