Ethereum Price News: ETH’s Rally Touches Key Support – Big Bounce to $5K Coming?

Ethereum (ETH) has closed lower in 5 of the last 6 trading sessions ahead of this week’s two key economic events – the release of the Fed’s minutes and Chairman Jerome Powell’s speech on Friday.

The top altcoin is currently approaching a key area of support at $4,100 that acted as a strong resistance for a year and a half or so and, depending on what happens next, this could be a defining moment for ETH’s rally.

Trading volumes remain quite high lately and currently account for nearly 10% of the token’s circulating supply at $45 billion.

On August 14, we saw as much as $75 billion worth of ETH exchanging hands as per data from CoinMarketCap as the price touched and retreated off its current swing high of the year at $4,788.

The market seems to be taking a much-needed breather after an impressive rally that propelled ETH from $1,400 to its current levels.

Major Tailwinds Favor a Bounce Off $4,100

The daily chart illustrates the relevance of this current level from a technical standpoint. The price is tagging a former resistance from above and it is also touching its trend line support.

ETH/USD Daily Chart (Coinbase) – Source: TradingView

A bearish breakout below this area could mark the end of this latest uptrend and the beginning of a much deeper correction.

The Relative Strength Index (RSI) has just stepped off overbought levels. This increases the odds of a much stronger pullback than most investors expect. However, in the current market conditions, it would be difficult to envision a future in which ETH does not hit $5,000 at least.

We have a combination of tailwinds that are playing in favor of ETH and that were absent in previous scenarios. This is a brief summary of some of them:

• Passing of the Genius Act: This important piece of legislation paves the way for the launch of new decentralized applications in the United States powered by stablecoins. These dApps will likely rely on the Ethereum network as their backbone.
• Favorable regulatory environment: A new leadership at the Securities and Exchange Commission (SEC) favors the launch of new investment and trading products that could increase the token’s liquidity and institutional adoption.
• ETF inflows rising: Hundreds of millions have been flowing to ETH-linked spot ETFs. Data from Farside investors shows that the combined assets under management (AUM) of these products have already crossed the $12 billion mark.
• Pectra upgrade: The Pectra upgrade constituted a significant improvement to the EVM’s operational framework as it made it more scalable and efficient. It also introduced the possibility of making ETH’s supply deflationary by burning a larger portion of the network’s gas fees.

Hourly Chart Shows Early Signs of Buying Pressure

Moving to the 1-hour time frame, we can see that ETH has not yet hit these supports. Instead, it has bounced off an area of accumulation from which ETH rallied from $4,300 to $4,800.

ETH/USD Hourly Chart (Coinbase) – Source: TradingView

We could expect a short-term bounce off this level as trading volumes seem to have spiked already as the price got to this point.

Nevertheless, higher time frame resistance and support zones tend to be much more relevant in the near-term. Hence, a long position at this point has low odds of delivering positive results as the narrative in the daily chart favors a much deeper push toward the $4,000 area.