Ethereum Retracing Into Important Support Amid Larger Downtrend — Price Analysis

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Ethereum Retracing Into Important Support Amid Larger Downtrend — Price Analysis

The story of Ethereum (ETH) now is simple: it has been trapped in a relentless downtrend since about June, and is trying to break free from it and return to a high timeframe uptrend – just like Bitcoin (BTC), essentially. And like with Bitcoin, the matter has not yet been decided. But there is plenty of reason to hope.

Starting on a 4-hour ETH/Dollar chart, we first note how depressed Ethereum’s trading volume is, dropped down to pretty much nothing on Bitstamp. We see a conflict in the indicators: a bearish convergence on the RSI, but a bullish divergence on the histogram.

ETH chart by TradingView

The histogram in particular looks like it’s decelerating in its bearish contraction, which argues in favor of the altcoin finding support in the blue support zone. This particular support zone is a very important one: not only serving as support during October 2019, but also as the lid on the 2018-19 bear market consolidation.

Coming to the daily chart, we see a mostly flat histogram downtrend; this suggests that momentum to the downside is not very intense. Price is floating back to the EMAs after ticking overbought on the RSI during the recent surge; and in this, Ethereum is showing a healthy correction.

A correction was neededETH chart by TradingView

Because of the importance of the present blue support zone, we can consider it fairly likely for price to hold around here. If it is, we can consider the medium-term uptrend preserved; but then, a lot of this probably depends on what Bitcoin decides to do (of course).

Going to the weekly ETH/Dollar chart, we can see that the long timeframe trend is down; and that Ethereum – not unlike Bitcoin at the moment – is getting rejected from the limit of that downtrend. On this chart, though, we can clearly see the potential for a wedging in between that downtrend and this important support.

Is pressure going to build?ETH chart by TradingView

Finally, finishing on the 3-day ETH/BTC chart, we see a similar situation of a high timeframe downtrend squeezing against a horizontal support.

Some similarities with dollar pairingETH chart by TradingView

This chart does not look too far away from its dollar companion, with the potential for a pressure buildup between the opposing forces of a downtrend versus a strong horizontal support.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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