Price analysis: Ethereum still trades in a tight range

November 19, 2019


Last month, Commodity Futures Trading Commission (CFTC) chairman, Heath Tarbert, branded Ether as a commodity, which in essence means that we may see regulated ether futures in the market in the coming months. In a new statement, Tarbet has taken a step back, saying that his institution is looking back at the nature of the planned Ethereum upgrade.

Ethereum’s developers plan to replace the current proof-of-work (PoW) model for transaction validation.The new design - Proof of Stake (PoS) authentication -  creates a profit-based system that effectively links owners with returns. 

According to Tarbert, both CFTC the Securities and Exchange Commission (SEC) are looking closely to see what Ethereum 2.0 upgrade is about.

“Staking is obviously different than mining in the sense that mining is by its very nature sort of more decentralised, whereas with the stake obviously it reduces energy costs because you’re just giving it to one validator or line of validators,” said Tarbert at CoinDesk’s “Invest: NYC” conference on Tuesday.

Institutions are focusing their attention on seeing how decentralised the Ethereum network will be after the 2.0 upgrade, while also monitoring the requirements expected of users to run nodes on the upgraded network.

“That’s exactly the kind of analysis that that we’re undertaking and the SEC is undertaking right now,” Tarbert added.

Whether US regulators will still see Ether as a commodity may be of utmost importance for the world’s second biggest coin. 

“Without futures, it’s more difficult for those that think the price of ether is overvalued to signal that to the market,” commented Aaron Wright, founder of ethereum startup OpenLaw.

Following Tarberts’ latest comments, many analysts and commentators seems quite sure that CFTC’s position will remain as it is.

“I don’t think it changes anything to be honest. Ether is a commodity as far as the … CFTC is concerned. I don’t see a reason why proof-of-stake would change that. It’s very similar to how proof-of-work actually works today when it comes to reward issuance,” said Eric Conner, founder of information site ETHHub.


On the technical side, Ethereum has continued to trade within a very tight range. As seen in the chart below, the price action has been trapped within a tight symmetrical triangle for the previous three weeks. As today is the fifth consecutive day the price may close below the 100 DMA, it looks like the bears have a bit more control in this market compares to bulls. 

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

Overall, the price action is trading between two important horizontal levels (upper and lower horizontal blue lines). Following a break of the 100 DMA five days ago, bears are slowly pushing the price action towards the triangle’s supporting trend line. A break and daily close below $175 will open the door for a potential test of the major support near the $150 handle. 

The last time ETH/USD traded below $150 was in April this year. Prior to the $150 handle, the zone around the $165 mark also used to act as an important level in the past. 

On the upside, the horizontal resistance is located just below the $200 point. In case the bulls suddenly gain total control of the market short-term, a break of the psychologically important $200 mark may lead to a test of the 200 DMA, which currently trades at $215.


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