Price analysis: Ethereum stays below horizontal resistance

Trading
December 10, 2019

Fundamentals

The big story for Ethereum is definitely the much-anticipated Istanbul fork, whose implementation was completed over the weekend. The network became live when it passed block #9069000. Previously, Ethereum completed St. Petersburg and Constantinople hard forks earlier this year. 

One of the main expectations is that Istanbul will enable more than 3,000 transactions per second (TPS), while maintaining decentralisation and privacy. In essence, the upgrade has implemented Ethereum Improvement Proposals (EIPs) that will contribute towards attack resilience, interoperability and lower gas costs. The list is as follows: 

  • EIP-2200: This EIP will change how the cost of the storage of data is calculated in Ethereum’s Virtual Machine, and will also give smart contracts the ability to execute more functions.
  • EIP-1884: This EIP will change the transaction cost of some EVM opcodes “to prevent spamming attacks and to balance the amount of computation in each block better.”
  • EIP-2028: This EIP will allow for zero-knowledge SNARKs and STARKs technology to be cheaper on the Ethereum blockchain, reducing the cost of “calling data within outputs.”
  • EIP-1344: This EIP will “add a way for contracts to keep track of the Ethereum chain they are on.”
  • EIP-1108: This EIP will make zero-knowledge SNARKs cheaper, allowing for cheaper scaling and privacy technologies.
  • EIP-152: “Adds the ability to verify the Equihash PoW within an Ethereum contract. This will enable relay and atomic-swap transactions between Zcash and Ethereum.”

In order to avoid consensus issues due to the shortage of nodes, developers encouraged operators of nodes to update their clients.

“If you are using an Ethereum client that is not updated to the latest version (listed above), your client will sync to the pre-fork blockchain once the upgrade occurs. You will be stuck on an incompatible chain following the old rules and you will be unable to send ETH or operate on the post-upgrade network,” it was stated in the blog post of Ethereum Foundation.

Elsewhere, Matthew Light, one of the more prominent Ethereum developers, expressed his concerns about the location of the Devcon 2, the annual developer conference of Ethereum. As the event is scheduled to take place in China, some developers have concerns about the location due to China’s human rights record.

"I would hope that Devcons will be held in countries not actively practicing genocide against segments of their own population. I also think basic standards of personal liberty should also be required, such as access to an uncensored Internet," wrote Light.

“I'm not saying that there should be no Ethereum conferences in China. I'm saying the annual global flagship Ethereum conference should not be held in a country where you have to use VPNs to access the Internet,” added Light. 

Technicals

As is the case with Bitcoin, Ethereum has been moving sideways in the past 10 days or so. Still, this consolidation process is taking place below the key horizontal resistance near the $152 handle. 


ETH/USD daily chart (TradingView)
ETH/USD daily chart (TradingView)


Looking mid-term, the price action is still trading within a descending channel, although now closer to the supporting line of the channel. Judging from the previous occasions, Ethereum will probably wait for Bitcoin to start moving more substantially before it attempts another break of the channel. 

On the upside, the zone around the $170 mark is home of two important resistance levels - the 100-DMA and the descending trend line that has connected lower highs since September. This zone is further supported by additional layers of resistance, starting from $190 and then all the way up to $225.

Looking on the downside, the first level of support is 78.6% Fibonacci retracement near the $142 mark, while the channel support comes just below the $130 handle. In addition, the 6-month low of $131.85, printed on November 25th, will only bolster the channel support line. These two levels together form the major target for the bears in the coming weeks and months. 

Ultimately, the horizontal support sits near the psychologically-important $100 handle.

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