While trying to recover from a trying week, Ethereum is falling back towards its recent lows of the year. All this in a market environment where good news is scarce. And with investors who currently favor a highly defensive posture. Especially since the central banks have made the fight against inflation their main priority. Which amounts, without saying it clearly, to abandoning the financial markets for an as yet indefinite period.
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The latest technical analysis regarding ETH does not bode well. In particular because of its correlation with a bearish trend on the main equity indices and Bitcoinfrom their respective ATHs. With sellers likely waiting for the opportune moment to attack the next support.
Ethereum – Price moves away from its range
The weeks follow and resemble each other since the double failure of ETH below the resistance of $3400 and the 30-week moving average (MM30 weekly). From now on, and barring an unlikely reversal of the situation, the exit of Ethereum prices below its tidy or horizontal channel (orange rectangle) seems confirmed. As a consequence, the validation of an ultimate condition for any downtrend: lower and lower highs and lows.
At the same time, sellers have several tricks up their sleeves. First of all, the downline becomes a major obstacle against rebound attempts. Secondly, the MM30 weekly slips below the resistance of $3400. This accentuates its predominantly bearish slope, and thus testifies to the beginning of phase 4 of Weinstein. Finally, and lastly, the technical indicators confirm their bad dynamics triggered since the beginning of May.
In sum, these unfavorable technical signals in weekly units tend to underline a threat below the support of $1700 becoming clearer. Because if this critical level were to break, the bullish cycle of ETH prices since the low points of March 2020 could be called into question.
Ethereum – Back to $1400?
With prices significantly below its tidy and the 200-day moving average (MM200 daily), it is difficult to envisage a favorable trend reversal in the near future. Notably, considering ETH’s recent rebound attempt, which is about to be aborted. And which, in reality, was only correcting a beginning of excess oversold.
At the same time, technical indicators in daily units do not deplore bullish divergences. And it is for this reason that Ethereum price downtrend may worsen below $1700. Because when you zoom out the daily chart to earlier periods, the potential drop seems difficult for investors in the cryptocurrency sector to take.
The next support around $1400 will be very interesting to watch. Especially since it matches the old Ethereum ATH, before the 2018 bear market. And if this market scenario, which was still unthinkable a month and a half ago, were to occur, the balance of power between buyers and sellers could come to a crossroads.
ETH – The correlation with BTC is likely to continue
A seventh consecutive week in the red would unfortunately be a historic first since the existence of Ethereum. And to the extent that excess oversold remains absent in weekly units, its downtrend could be long term. This implies that the panic phase would not have reached its maximum yet. And even worse, the drying up of liquidity linked to the tightening of monetary policies by central banks could well penalize the cryptocurrency market.
Since ETH tends to follow BTC, obviously bent on validating its own bear market, the $1700 support may not last long. A probability firmly linked to the current uncertainties on the financial markets, which persist month after month. And which reflects an environment risk-off registered until further notice.
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