Technical Analysis and Market Entry: Ethereum Drop Appears to Be Imminent 

  • The Ethereum price continues to edge lower, stuck within the control of the market bears. 
  • ETH/USD price remains below a critical ascending trend line of support, leaving it vulnerable to further downside risks. 

ETH/USD: Recent Price Behaviour

The Ethereum price remains at the mercy of the market bears, as near-term rallies continue to be sold. ETH/USD is yet to show any promise of escaping a stubborn bearish trend, which has contained the price since late June. It has dropped as much as 55%, something that has been witnessed across the cryptocurrency market. The bulls failed to sustain a decent path to recovery, which had been set out at the beginning of the year. 

Weekly Chart View

ETH/USD weekly chart.

As noted above, ETH/USD was making decent moves to the north from January, before losing much momentum in June. The price was being supported to the upside by a long-running ascending trend line, which had been in play from December 2018. It was initially trading down at $85 before the buyers came piling in to drive Ethereum north. Given the trend to the downside, the bears have managed to force a break and closure below the detailed support. 

The breach commenced on the week of 23 September, seeing a closure below. Almost some three weeks have passed now and the price has retested and flirted just underneath the trend line. Technically, it does make it vulnerable to further downside, given the failure to break back above. The resistance of this is now tracking at $185, which has so far proven its strength, preventing the bulls from a way through. 

Daily Chart View

Price action via the daily chart view demonstrates further downside pressure to come. ETH/USD was moving within an ascending broadening wedge structure, which has been breached. The pattern had contained the price from 25 September, up until 15 October, the session of 16 October, sellers forced a breach. It has since retested over the last two sessions, failing to break back above, leaving it exposed to greater downside. 

ETH/USD daily chart

Trade Recommendation 

Given the above-detailed pattern breakout, bias to the downside remains appealing. In terms of targets; $135 and then the psychological $100 mark. Stops to be placed at $195, leaving enough room above the lower acting trend line of the broadening wedge. Entry would be around the current market price, just below the wedge pattern. 

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.

Author:
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.