Technical Analysis and Market Entry: ETH/USD Crashes Out of Bearish Flag $100 Now Eyed

  • Ethereum price falls victim to a fresh bout of selling pressure, following a range breakout.
  • ETH/USD smashed out to the downside from a bearish flag, falling to lowest levels in nine months.

ETH/USD: Recent Price Behaviour

Ethereum encounters fresh selling pressure, as the sellers’ breakout of a critical narrowing technical range structure. Price action had been moving within a bearish flag, which was a signal of consolidation, ahead of further downside. The tight trading conditions had been observed from 23 November, prior to the bears forcing a breach on 16 December.

Given the period of range-trading, it did make the price vulnerable to the downside and subject to an explosive breakout. ETH/USD had been moving within $150 at the top, down to $141, a minuscule $10 range. As each session went on, it made it increasingly likely of a breach coming into action. The initial bout of selling was likely to have been exacerbated by stops being triggered to the downside.

ETH/USD daily chart.

Critical Flag and Zone

As earlier detailed, the technical bearish flag structure was critical at initially preventing a free-fall for ETH/USD. Despite the narrow trading that was observed, it provided much-needed support. Additionally, the back-end of November, the market bears had forced a breach of a known demand area.

The zone of support noted tracks at the range of $170-150, it has significance as the price has not traded below it since March. It is an area known to attract buyers, as proven on several occasions. The most recent during the bull run in earlier in the year, back in May, ETH/USD used this zone to launch firmly to the north. The price had gone on to print the highest levels seen since August 2018, in June.

However now ETH has fallen below the above-noted, it does signal fresh uncertainty. The price is now being forced to trade at the lowest levels seen in some nine months. Markets bears are set to push for a full reversal of the 2019 recovery, with the price likely to end back down at the 2018 bottom area.

Trade Recommendation

Given the recent breakout, eyes are still on further moves to the south. Opportunities do look favourable to the downside; however, a small technical pullback would first be sought. In terms of entry, upon a retest of the breached flag structure, around $142.50. Targets; $120, $105 and then $90. Stops to be placed just above the noted pattern at $160.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.