It looked like Ethereum (CRYPTO:ETH) was going to make a big move and sure enough, it has.
ETH has decisively broken the resistance that was at the $2,500 level. There wasn’t enough supply to satisfy all of the demand, which has forced buyers to pay higher prices, and it has resulted in a rally.
But now it’s overbought. This means it could consolidate or start to trade sideways.
On the below chart, the red line is two standard deviations above the recent 20-day average price. ETH is currently trading above it.
This also happened on April 3 and April 15. Both times were followed by some profit-taking.
Many trading algorithms are based on probability theory. The theory states that 95% of all trading should be within two standard deviations of the average. With ETH above this threshold, these algos come into the market as sellers or short sellers.
This could put a short-term top on the crypto as it did twice before earlier this month.
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