Disclaimer: The findings in the following analysis are the sole opinions of the author and should not be taken as investment advice.
Ethereum’s abrupt pause just below $ 3,500 has raised some questions about its medium and long-term trajectory. In fact, the latter seemed quite off, at the time of this writing. Furthermore, the responsibility seemed to lie in a crucial area. An area that could confirm or deny a bearish thesis for the world’s largest altcoin.
At the time of writing, ETH was trading at $ 2,938, down 1.4% in the last 24 hours.
Ethereum daily chart
ETH lined up consecutive red candles on August 16 and 17 for the first time in nearly a month, as buyers were unable to sustain their efforts above $ 3,200. A doji candle, which followed shortly after, failed to trigger an immediate reversal and ETH opened another day in the red. Focus now falls to the 20-SMA (red), the 23.6% Fibonacci level ($ 2,957) and a defensive line of $ 2,890.
If ETH closes below these points for the next 24 hours, the chances of another 8% decline towards $ 2,700 will be high. Also, a drop below the 50% Fibonacci level ($ 2,528) would completely nullify ETH’s bullish structure. However, such a drastic result would be unlikely in the next few days.
Here, it is important to mention that BTC also threatened to fall below its daily 20-SMA. This is something that could also have a commensurate effect on the price of ETH.
To invalidate another selloff, the bulls would have to react quickly. A close above $ 3,000 would be a step in the right direction and a high formed at $ 3,200 would be the best case outcome.
The MACD witnessed a bearish crossover for the first time in over a month and headed towards the middle of the line due to recent selling pressure. The directional movement index also suggested that ETH’s uptrend was in danger of halting its uptrend should the -DI cross above the + DI.
On the upside, the RSI was still trading in bullish neutral territory. During an uptrend, the RSI generally finds support between 40-50 and the same can be expected in the future. If this index falls below 40, traders should prepare for another selloff.
There were multiple red flags in the Ethereum market and the chances of a pullback towards $ 2,700 seemed high. However, the bulls had a small window to avoid such a result.
Avoiding a close below the 38.2% Fibonacci level and forming a new high at $ 3,200 would reject a bearish thesis and allow ETH to move further on the charts.
This is a machine translation of our English version.
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