After rising to a week high of $838 on Sunday, a downwards price correction attempt began pulling ethereum price downwards to a day low of $685 on Monday. Even though the price of ether dipped below the support level around $713.24, it rose within less than 8 hours above this significant support level which corresponds to the 61.8% Fibonacci retracement. The market’s bulls took the upper hand again after this temporary overshoot below this seemingly strong support level. Right now, ethereum price is below the upwards trend line which has been marking the market’s movement since April 7th.
Will the price of ether rise again towards the resistance around $849.08?
Dropping below the rising support level on the 4 hour ETHUSD chart:
We will examine the 4 hour ETHUSD chart from Bitfinex, while plotting the 50 period, 100 period, and 200 period SMAs, as shown on the below chart. We will retain the Fibonacci retracements we plotted during an earlier analysis, which extend between the low recorded on October 23rd, 2017 ($273.50), and the high recorded on January 13th, 2018 ($1,424.06). We can observe the following:
- After soaring to a day high of $838 on Sunday, ethereum price failed to continue on rising to test the resistance around the 50% Fibonacci retracement (horizontal green line), which corresponds to $849.08. After the day high had been recorded, a downwards price correction attempt began pulling the price of ether downwards all the way until a low of $685.18 was recorded earlier today (Monday). Right after the day low had been hit, the downwards price correction attempt was halted and the market’s bulls began taking the upper hand again pushing the price of ether upwards to $748 at the time of writing of this analysis.
- The price of ether dropped below $713.24, which corresponds to the 61.8% Fib. retracement (orange horizontal line), for less than 8 hours. This reflects the strength of support around this level. This is also evidenced by the long downwards shadows of the pair of candlesticks that formed around this price level.
- Right now, ethereum price has dropped for the second time since April 7th, below the rising support level (blue upwards sloping trend line on the above chart). A week ago, the price of ether also dipped below this important support level, but rose again above it within around 24 hours.
- The 50 period SMA (green curve) acted as a support level, upon which the price of ether bounced off during the downwards price correction attempt that was active during Sunday and Monday.
- The 100 period SMA (blue curve) has just crossed above the 200 period SMA (orange curve), which represents a “bullish crossover”.
Now, let’s examine the 1 day ETHUSD chart from Bitfinex, while plotting the Bollinger Bands indicator, the RSI, and the Ichimoku Cloud as shown on the below chart. We will also keep our Fibonacci retracements. We can note the following:
- Ethereum price was resisted by the upper Bollinger band which was near the 50% Fib. retracement ($849.08 (horizontal green line). The price of ether bounced off the upper Bollinger band to drop below the rising support level and fall temporarily below the 61.8% Fib. retracement (orange horizontal line).
- The downwards price correction attempt was ignited when ethereum price was overbought as evidenced by the RSI value, which was near 70. However, the RSI’s value has dropped below 70 now and its curve is downwards sloping, which reflects that ethereum is no longer overbought and chances are favorable to see it rise again.
- The Ichimoku Cloud is still greenish, so the overall market sentiment is still bullish. The Leading Span A of the cloud is near the $680 price level. As such, we can expect $680 to be a strong support level during the next 26 days.
Conclusion:
Ethereum price witnessed a downwards price correction attempt that started to overrule the market after a week high of $838 was recorded on Sunday. Price correction took price downwards to a low of $685.18, before the market’s bulls manage to take the upper hand again. We can expect ethereum price to start rising again after successfully consolidating above the support level around $713.24.
Charts from Bitfinex, hosted on Tradingview.com
