Former Goldman Sachs executive Raoul Pal says that after breaking a downtrend Ethereum (ETH) is forming a strong bullish technical pattern.
In the Global Macro Investor newsletter, Pal says the world’s second largest cryptocurrency by market cap may form a cup-and-handle pattern.
The so-called William O’Neil’s Cup with Handle signals a bullish continuation with a price consolidation followed by a breakout. He also points to daily DeMark Sequential Countdown analysis.
“The daily chart on ETH looks extremely constructive. We are currently breaking the downtrend at (1), there is an inverse head-and-shoulders at (2) with the right shoulder forming just above previous resistance (one-year downtrend), and a daily DeMark Sequential Countdown in process on day three of 13 higher.
Finally, a bit higher up closer to $2,000 a MASSIVE cup-and-handle looks to be forming; all very bullish and something we’re monitoring closely.”
The Sequential Countdown gauges when the market is prone to reversal based upon buyer and seller demand by comparing what the current price closed at to previous closes. Each stage of the analysis is assigned a number and when it reaches a count of 13 it indicates the market is prone to reversal.
Another bullish signal Pal looks at is the US Dollar Index (DXY), which has shown a correlation with risk assets like crypto. When the US dollar strengthens in value, crypto prices tend to decline. He forecasts a likely decline in the dollar.
“The dollar recently put in another daily Sequential Countdown 13 and reversed hard on Friday, currently in wave three of five lower with a price objective of 106. We’re not totally convinced that we can’t make a final push higher towards 117 but we’re closing in on a top.”
Pal previously predicted a big break out for Ethereum, saying it would outperform Bitcoin.Don't Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
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