Traders should be cautious as ETH price is facing big resistance alongside rising Bitcoin dominance.
All eyes have been on Bitcoin price in recent weeks as the world’s biggest cryptocurrency rallied by more than 60% in a matter of weeks.
However, the focus may soon shift to Ethereum’s Ether (ETH) as it approaches the final resistance zone before a big potential breakout. This is not only the case with the U.S. dollar pair but also with the Bitcoin (BTC) pair, as the latter may have just reached its cycle low.
Could this mean that there’s an alt season on the horizon? The signals are certainly getting stronger by the day. Let’s take a looks at the charts.
ETH/USD must break resistance at $450 to break out
The weekly chart of Ether is fighting the final massive resistance zone before $600, with $800 on the horizon thereafter.
This resistance zone was rejected heavily in the summer, after which a retest of the $300 area occurred. This support level has held, which means that a retest of this resistance area is now on the table.
As stated, Ether’s price made a new higher high, after which the $310 support/resistance flip warranted a higher low. This indicates a bullish uptrend, where further continuation to $800 may just be a matter of time.
ETH/BTC finds the bottom?
The weekly chart for ETH/BTC, however, shows a clear rejection at the 0.04 sats resistance. This rejection marks the high of the current range. Through this mark, a retest of the 0.026 sats area was the likely outcome.
Therefore, traders should have anticipated such a retest because such levels are often retested before confirmation of a breakout. And because quarter four isn’t the best period for altcoins, Ether might be close to finding a bottom in the BTC pair.
In that regard, the vertical lines mark the bottom of previous retraces, which all bottomed out in December.
In other words, the retrace may be coming to an end if history repeats itself once more, which means the next alt season could occur in the first quarter of 2021 and bring Ether closer to $800.
Bitcoin dominance is rising
The weekly Bitcoin dominance chart has been showing a clear rally in the past few months. Several arguments can be made for this surge.
One of them is the historical and cyclical pattern, during which altcoins tend to underperform in the fourth quarter of the year.
Bitcoin now being in the spotlight is another argument. With price now just 20% shy of its all-time high in 2017, alongside increasing acceptance by institutions and big-name investors revealing that they hold BTC, Bitcoin is solidifying its brand as the king of cryptocurrencies.
However, the resistance zone around 66% to 68% is unlikely to break further up, as the market is currently seeing a support/resistance flip here. The Bitcoin dominance was already rejected once at this resistance zone.
If history repeats, a drop toward 56% to 57% is very likely to occur for Bitcoin dominance, which would be a very bullish sign for altcoin traders.
Buy the dip if ETH drops to $350?
However, traders shouldn’t become too bullish at resistance, which is where Ether is at right now. A correction is likely, given that the Fear & Greed Index is currently showing “extreme greed,” comparable to the levels seen at the peak high of June 2019.
If such a correction occurs, levels around $320 to $340 may be a great opportunity to enter an ETH position.
If Ether establishes support at that range and starts to attack the resistance at $460 to $480 again, a massive breakout and impulse wave toward $800 would be a very likely outcome.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.