Ethereum, the second-largest cryptocurrency by market capitalization, is experiencing a correction in its price after failing to break through the $1,880 resistance zone. The digital asset is now trading below $1,850 and the 100-hourly Simple Moving Average, indicating a bearish sentiment in the market.
Formation of Bullish Flag Pattern
A bullish flag pattern is forming on the hourly chart of ETH/USD, with a resistance level near $1,855. This pattern suggests that the price might drop towards the $1,820 support level, where the bulls could potentially regroup and make a stand against further downside pressure.
Key Levels to Watch
The first major resistance for Ethereum is at $1,872, followed by the crucial level at $1,880. A decisive close above this level could significantly increase the chances of a sustained upward move towards $1,920. If the price continues to rise, it might even reach the $2,000 hurdle, and potentially move towards the $2,040 or $2,120 levels.
However, if Ethereum fails to overcome the resistance at $1,855, it is likely to experience further downward pressure. The initial support level on the downside is near $1,840, which coincides with the 50% Fibonacci retracement level of the recent rally from the $1,800 swing low to the $1,876 high.
Major Support and Bearish Scenario
In the event that the bulls fail to protect the $1,820 support level, a sharp decline in the Ethereum price could occur. The next significant support level is near $1,800, followed by the $1,720 level. Any further losses beyond this point could have a significant impact on market sentiment, leading to a broader bearish sentiment.
Analysis of Technical Indicators
The hourly Moving Average Convergence Divergence (MACD) for ETH/USD is losing momentum in the bullish zone, indicating a potential weakness in the price action. Additionally, the Relative Strength Index (RSI) for ETH/USD has fallen below the crucial 50 level, further supporting the notion of possible downward pressure on the Ethereum price.
The correction in Ethereum’s price is an essential phase in the cryptocurrency’s market cycle. It provides an opportunity for investors to reassess their positions and make informed decisions based on the prevailing market conditions. As the price approaches crucial support levels, traders should closely monitor the price action to identify potential entry or exit points.
Ethereum is currently undergoing a correction after failing to break through the $1,880 resistance zone. The formation of a bullish flag pattern suggests the possibility of a drop towards the $1,820 support level. However, if the bulls fail to defend this level, a more severe decline could occur. Traders should closely monitor the technical indicators and key levels to gauge market sentiment accurately. Overall, the correction presents both risks and opportunities for market participants, requiring a cautious and strategic approach.