Ethereum is pausing from its slide as it tests support at the bottom of the descending channel on the 4-hour time frame. Applying the Fibonacci retracement tool shows how high price could pull up from here.

The 61.8% level lines up with the descending channel resistance around $400 and might be the line in the sand for the downtrend. It is also in line with the 200 SMA dynamic inflection point. The 100 SMA is below this longer-term 200 SMA to show that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse.

In addition, the gap between the two is widening to reflect stronger selling pressure. The 100 SMA is just close by and might serve as dynamic resistance in a shallow pullback. The nearest Fib is at the mid-channel area of interest around $340.

RSI is heading higher and has some room to climb before hitting overbought levels. Stochastic is also on the move up and could keep rising until it hits overbought conditions. Doing so and turning back down could bring a return in selling pressure that would allow the downtrend to resume. A break past the channel top, on the other hand, could lead to an uptrend.

Ethereum chart

The recent slide in Ethereum is being blamed on ICOs being cashed out at a faster pace recently, possibly as investors react to the ongoing declines in the cryptocurrency market or are starting to see through some ill-constructed tokens.

And with Ethereum being the main platform used in constructing these ICOs, the selloff is also leading to a massive cashing out in ERC-20 tokens. Then again, the rebound in the cryptocurrency industry more recently is calming investors and preventing further ICO dumping.

Apart from that, there has been an observable improvement in risk appetite in the financial markets as China and the U.S. will resume trade talks next week.

Images courtesy of TradingView

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