Ethereum ETH
Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, has found strong support in the $1,750 area. The bounce came just in time, as the cryptocurrency lost more than 50% of its value since Bitcoin’s decline triggered by the Chinese authorities clamping down on miners.
Speaking of miners and the intense crypto mining activity, there is a tight correlation in place between the prices for GPU and Ethereum. The supply bottlenecks in the chips manufacturing industry led to higher prices for both chips and Ethereum.
GPUs or Graphics Processing Units (GPUs) are the best tool for mining Ethereum, and thus the cryptocurrency mining has increased the chips shortage worldwide, with extreme implications for the global economy. Therefore, the Chinese authorities’ decision, while meant to curb the crypto mining activity, is viewed as easing the chips crisis.
Having said that, the prices of GPUs may offer a valuable tool for traders wanting to forecast future Ethereum prices. A fall in GPU prices makes mining equipment more affordable, and North American miners may increase their activities.
The technical picture looks constructive in the short term but bearish in the medium to long term. As Bitcoin bottomed around the $30,000 area, so did Ethereum. The $2,000 level proves to be pivotal, with downside pressure while below and upside potential while above.
Currently, bears have a case. The market has reached dynamic resistance given by the neckline of a head and shoulders pattern. More precisely, the neckline’s projection offers dynamic resistance, and bears may want to sell against the previous lower high, which acts as an invalidation level.
Therefore, bears may sell short Ethereum with a stop loss at $2,900 and a take profit level set by using a risk-reward ratio of 1:2. The measured move of the head and shoulders pattern cannot be used because it is too big given the price action seen on Ethereum.
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