Disclaimer: The conclusions of the following analysis are the sole opinion of the author and should not be considered investment advice.
Bitcoin continued to trade within the $28.7k to $30.6k range while the majority of the rest of the altcoin market was in a downtrend. Ethereum has managed to stop the bears over the past two weeks after a strong decline from the $3000 level earlier in May. On the previous day, sellers seized the initiative and pushed ETH below the $1960 support level.
The market structure for Ethereum on the lower time frame chart was bearish and pointed to further losses.
ETH – 1 Hour Chart
On lower time frames such as the hourly, Ethereum appears to be forming a range between $1900 and $2120. However, over the past week, sellers were able to force the bulls to retreat even at the $2080 and $2060 levels. This suggests that the buying pressure has eased somewhat.
The Visible Range volume profile shows the value area high and low (gray) at $2242 and $1733, with the control point at $1967. This level was the most important level of support for the bulls, and coincided with the long-term horizontal support level of $1963. However, over the past few days, the bears have gathered enough strength to force the price below this support area.
$1750-$1950 (highlighted in cyan) has been an area of demand since July 2021, with the price turning south towards $1710 to test support. Therefore, in the near term, a rally to $1800-$1840 is possible, followed by another downside move.
argument
The RSI showed a bullish divergence (orange) where price turned lower while the momentum indicator made higher lows. This bullish divergence is indicating a pullback towards $1840, but the trend remains bearish. A hidden bearish divergence can be used to signal the continuation of a prior downtrend.
OBV slipped below its support since May 13, and this means that selling volume has been dominant. The CMF once again fell below -0.05 to show heavy capital inflows from the market.
conclusion
Bullish divergence means that a bounce is imminent, and the $1800-$1840 area could be a place to enter short positions with a stop-loss at or above the $150 mark. To the south, $1710 and $1555 are support levels and a downside break for ETH is likely in the coming days.