Disclaimer: The conclusions of the following analysis are the sole opinion of the author and should not be considered investment advice.
Over the past few days, Ethereum’s [ETH] A revival from the $900-zone saw a reversal from its one-month trendline resistance (white, dashed). The recent string of red candlesticks has brought ETH under control for a near-term bearish trend.
The fallout on bitcoin sentiment has fueled a sense of fear in the altcoin market. ETH’s drop below the $1,090 level on June 19 took ETH to January 2021 lows.
As the gradual recovery phase continues, a potential rally above the $1,125 support could retest the month-long trendline resistance. At press time, ETH was trading at $1,129.6, down 6.19% over the past 24 hours.
ETH 4-Hour Chart
ETH’s Bollinger Bands (BB) have revealed bearish control while price was hovering near its lower band. The altcoin still had to break above its $1,200 area range to trigger a trend-changing rally.
During its previous retracement, ETH lost more than half of its value in just nine days (since June 10). As a result, the alt moved towards its 17-month low on 19 June.
With the $900-zone back in near-term buying, it gave ETH a much-needed push towards the month-long trendline resistance. During this phase, ETH was swinging between a rising wedge on the four-hour time frame.
After the expected breakout from this pattern, the 20 EMA (red) looked south and fell below the 50 EMA (cyan). This bearish crossover could worsen the buying power in the coming days.
A rally from the immediate support could help the bulls reclaim the $1,200 area. Thereafter, the month-long trendline could continue to act as resistance barriers. However, an extended decline below the $1,125 level could completely expose it to testing the $1,049-$1,090 range.
argument
The Relative Strength Index (RSI) is showing strong bearish control. Any revival from its trendline and horizontal support could confirm a bullish divergence with the price as the index fell towards the 37-point mark.
But with the MACD line falling below the zero-mark, buyers still have a long way to go to turn the trend in their favor. Nevertheless, ADX revealed a fairly weak directional trend for Alt.
conclusion
The bulls needed to increase buying volume at the $1,125 support level to prevent downside risk of 6-7%. An immediate rally could help ETH attempt a bounce back towards the $1,200 area before any trend-influencing move.
Lastly, investors/traders need to keep an eye on the movement of bitcoin. This is because ETH shares a 99% 30-day correlation with the king coin.