Technical Analysis and Market Entry: Ethereum Risks Another Wave of Selling Pressure

  • Ethereum remains at the mercy of the market bears, dropping 70% in the last four weeks.
  • ETH/USD successfully achieved the previous article targets, with deeper moves south eyed. 

ETH/USD: Recent Price Behaviour 

The Ethereum price is moving within consolidation mode, taking some respite after being firmly within the control of the market bears. ETH/USD has been on the decline for four consecutive weeks, not showing a sign of that changing as of yet. During the noted period, it has seen the price dropping as much as 70%. 

The price fell from heights of $286 down to $86; it had achieved the highest levels since July 2019. Recently ETH dropped back down to levels not seen since December 2018. The price completely paired back the gains and promising-looking recovery that had been set out from the start for 2020. At the commence of the year, Ethereum was trading down at depressed levels of $120. The bulls were able to drive the price 140% higher, the best run north seen since April – May 2019. 

Weekly Chart View 

In terms of the weekly performance, it is the worst run to the south seen since July – August 2018. The market has for quite some time failed to sustain a bull run, as rallies continue to be sold by the bears. Circumstances this time around have been greatly more sensitive, with sentiment with risky assets very much sour. Investors across a variety of asset classes have been closing out for cash, due to the global Coronavirus fears. 

ETH/USD has been forced back to trading within a descending channel structure. The price had initially made a breakout from this in January, however now falling back within. The noted pattern had been in play from July after the bears reignited their pressure to the south. Critical weekly support should be noted at $95, where the descending trend line of the channel is tracking. 

ETH/USD weekly chart.

Daily Chart View

Price action via the daily chart view has formed a bearish flag structure, which is increasingly subject to breakout to the south. The formation of this has been in play since 13 March, following the deep selling almost some two weeks ago. ETH/USD can also be observed at the time of writing knocking on the upper acting trend line, of the earlier noted descending channel.

ETH/USD daily chart.

Trade Recommendation 

The previous article targets were successfully achieved, given the steep falling in the price. Given the above described bearish technical structure, deeper moves to the downside remain attractive. An entry would be desirable around the current market price. Targets to the south eyed at; $90, $80 and then $75. Stops to be placed above the flag at $161, leaving enough breathing room.

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.