Ethereum has gained over 300 points in market value in the last few hours.
The explosive price action appears to be capped at $3,360.
A daily close above this level could push ETH to $4,000.
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Ethereum has rallied with the rest of the market since the monthly trading session started. Still, ETH must overcome a crucial obstacle to resume its uptrend and re-enter price discovery mode.
Ethereum Reaches Key Resistance
Ethereum looks like it’s breaking out.
The second-largest cryptocurrency by market cap is up more than 15% in the last 36 hours, gaining more than 400 points in market value. ETH rallied from a low of $2,850 to hit a high of $3,280 today.
From a technical point of view, Ethereum still faces one obstacle before it can advance toward $4,000.
The Fibonacci retracement indicator, measured from the mid-May all-time high of $4,384 to the Jun. 22 low of $1,700, suggests that $3,360 represents an important supply barrier. The 61.8% Fibonacci retracement level and the 50-day moving average are both hovering around this price point. Such a significant resistance cluster could help determine the direction of Ethereum’s trend.
For instance, another bullish impulse that allows Ethereum to slice through $3,360 could mark the resumption of the uptrend. In this eventuality, ETH could climb to test the psychological resistance level at $4,000 before aiming for the all-time high of $4,384.
ETH’s circulating supply is decreasing at a rapid rate, which could lead to a supply shock. Therefore, the $4,384 level may not be able to contain it from surging to a new all-time high of $5,000.
However, market participants must be aware of the threat that $3,360 poses. Rejection from this critical resistance level could result in further losses as some traders may be encouraged to exit their long positions. The increase in downward pressure could push Ethereum below $2,700 and start a new downtrend to $1,700.
In the event of a bearish outlook, Ethereum would have to hold above $1,700 as there is no other important support level underneath it that could prevent it from crashing to $1,000.
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