Warp speed to $2,000? Watch these levels as Ethereum nears all-time high

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Bitcoin (BTC) is currently approaching $40,000 after seeing massive gains in the first seven days of 2021. This is a 100% move up from the previous all-time high in December 2017. In other words, the price levels it took Bitcoin three years to recoup have now nearly doubled in a matter of weeks.

ETH, BTC price gains, January 2021. Source: Digital Assets Data 

Meanwhile, the price of Ether (ETH) has surged by more than 100% in three weeks. However, it is yet to break its all-time high of roughly $1,420 on Jan. 13, 2018.

Therefore, the primary question is whether altcoins will underperform, keep pace, or outperform BTC in the near term. Let’s look at the ETH price charts to get an idea where this «altseason» can go in the near term. 

Ether reaches second Fibonacci level for a potential top

ETH/USD 3-day chart. Source: TradingView

The three-day chart for Ether is displaying a vertical rally in recent weeks, which resulted in several key levels being hit. In this case, the Fibonacci extension tool is useful in determining the next potential top.

Frequently, this indicator will be used to determine different top structures in price discovery, but it can also be used to gauge the likely strength of the next impulse move.

In this case, the recent high of the impulse move was at $470. The current low was at $90 in March 2020. Based on that information, the 1.618 Fibonacci level was found at $750, while the 2.618 Fibonacci extension was at $1,150. The latter also confluences with the all-time high region, which Ether is currently in.

The next higher low puts $2,700 in play

ETH/USD 1-week chart. Source: TradingView

The weekly chart has to be put on the logarithmic scale to make this analysis. However, if the Ether chart tops out in the near future (this could also be after a rally towards $1,500 and a new all-time high), the same Fibonacci extension can be drawn over the recent impulse move.

The current high is at $1,230, while the recent low is found at $310. Thus, the Fibonacci extension finds potential top structures at $1,800 and $2,700-2,800.

The higher the current impulse wave goes, the higher the prospects of a new rally.

Which support levels are critical?

ETH/USD 1-week chart. Source: TradingView

The weekly chart shows that the market is accelerating. However, investors and traders should anticipate a potential correction to be occurring soon as nothing goes up in a straight line.

In that case, Fibonacci can also be used to define support areas. The primary support zone to test is the region between $775-825, the 0.35-0.382 Fibonacci level. This support zone is confluent with the rejection of that level in April 2018.

If that level doesn’t provide enough support, a further correction toward the order block around $600 becomes likely. Such a correction would be massively painful for the market and cause the price to drop more than 50%, which seems unlikely at this point.

Key near term support for ETH/USD

ETH/USD 1-hour chart. Source: TradingView

The lower time frame chart shows an apparent surge with the drawn trendline continuously serving as support.

In such a way, the trendline itself is a massive indicator of further upward and downward momentum. If this trendline fails to sustain support, downwards pressure seems inevitable.

In that case, if the trendline fails to hold, the $1,120-1,130 should hold. If not, Ether is back in the previous range, and a test at $950 will then be on the cards.

The bullish case, however, is new all-time highs for the price of Ether if this trendline remains intact.

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.