Technical Analysis and Market Entry: Ethereum Price is Moving Within a Bearish Flag Subject to a Breakout

  • Ethereum’s price is moving within consolidation mode, as the selling pressure eases.
  • ETH/USD has formed a bearish flag structure via the daily chart view, subject to an extended breakout south. 

ETH/USD: Recent Price Behavior 

The Ethereum price has stabilized over since the back-end of August, after dropping down to the lowest levels seen since May 2018. ETH/USD was forced to retreat to a large area known for buyers. 

The zone runs from $185 down to $165, which the price has not traded below since early May. Previously, when ETH was trading within this territory, it managed to go on a chunky bull run, rallying up to $364. It was the highest the price had been since August 2018, before running out of bullish momentum.

ETH/USD late in August broke out to the downside from a bearish technical pennant structure, which resulted in the price falling deep within the above-noted demand zone. The earlier described price consolidation has produced a bearish flag, subject to a potential breakout south. 

Should the bears force a breach, then a new wave of selling pressure is likely to follow. The danger of such a price development could be very punishing, as the next major zone is quite some way to the downside.

There is a lack of signs that the price is yet to escape from the dominating stubborn bearish trend. ETH/USD has been falling since the back-end of June. The price has been on the decline for nine out of the last eleven weeks.

It has dropped as much as 55%, showing much resemblance to the pace of falling seen in the second half of 2018. The intentions of the market bears look clear, with eyes on a retest of the bottom area of last year. 

ETH/USD daily chart.

The Big Psychological $100 Return

As detailed above, the next area of interest for the bears would be the psychological $100 price mark. There does not appear to be much in the way of support until these depressed levels, where ETH/USD was seen in late 2018. 

Ethereum bottomed within the range of $100-$80, something observed between November-December. The bears had previously smashed through the $185-$165 range, to tumble down sub-$100 quickly. Ethereum being forced to such lows could spark much further panic selling. 

Trade Recommendation

Given the earlier described bearish flag structure, ETH/USD is subject to further potential downside moves. In terms of targets, the $100-$80 range would be of interest, and stops would be placed just above the flag at $195. Entry would be around the current market price, as Ethereum trades within the pattern’s confinements. 

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.