Ethereum price has dropped 3% in 24 hours to trade at $1,490 while responding to a widespread bearish wave in the crypto market. The largest smart contracts token, which is also the second-largest digital asset has cumulatively lost 8.7% in seven days.
It appears that altcoins like ETH, BNB, and MATIC will continue giving back all the gains accrued since late December unless the prevailing technical outlook changes significantly. Although investors are worried the crypto winter never really left, they can take this opportunity to stock up on lower-price altcoins like ETH.
(1) Michaël van de Poppe on Twitter: “Sweep of the markets took place in which #altcoins have been dipping some more. Most of them are in higher timeframe support regions or are getting there. I’d look at longs at this point, despite the overall negative consensus we have.” / Twitter
Where Is Ethereum Price Headed?
Ethereum price is slowly dipping toward a strong support area of around $1,444. The buyer congestion in this region has been reinforced by the 100-day Exponential Moving Average (EMA) (in blue) and highlighted in the lower yellow band—see the daily chart below.
The rain started beating Ethereum price as soon as bulls attempted a break above the seller congestion, represented in the multi-month falling trend channel. A break and hold above the channel or if you’d like the hurdle at $1,700, could have excited investors and cleared the path to $2,000. Significant price rallies are often bolstered by the fear of missing out (FOMO), bringing $3,000 within reach.
For now, the 50-day EMA (in red) caps Ethereum price action under $1,499. If bulls wish to flip the technical outlook, they must lift above this level and the subsequent 200-day EMA (in purple) at $1,527.
On the other side of the fence, Ethereum price faces growing selling pressure, likely to be emanating from the Moving Average Convergence Divergence (MACD) indicator. As the MACD line in blue flipped below the line in red, a sell signal appeared.
Odds also moved in favor of the bears as the momentum indicator dropped to the mean line. Declines would intensify if the MACD slips into the negative region below the mean line at 0.00.
Traders who may be looking forward to shorting ETH should exercise patience until the MACD slides below the mean line. Furthermore, Ethereum price should also slip below the 100-day EMA to validate a downtrend.
Otherwise, there is a high chance, ETH price may rebound off the 100-day EMA as bulls push toward higher levels at $1,700 and $2,000, respectively. If push comes to shove and Ethereum price extends the leg below the upper yellow band, the nearest robust support would move downstream to $1,200.
Evaluating Ethereum Price Profitability This Week
Ethereum price appears to be rewarding short traders following an aggressive bullish push throughout January. From the four-hour chart, the broken support at $1,500 was ETH’s last line of defense with losses to $1,400 beckoning.
The MACD is on the verge of revalidating a sell signal as the line in blue crosses below the signal line in red. Notice that the momentum indicator is in the negative region, a position that could explain the overhanging bearish cloud.
With the 50-day EMA creating a divergence below the 100-day EMA, a recovery is unlikely in the coming session, possibly for days. Investors should also consider the position of the 50-day EMA (in red) relative to the 200-day EMA (in purple).
Remember, if the 50-day EMA crossed below the 200-day EMA, a short-term death cross will come into the picture. In other words, the pattern would ignite another short-term sell-off in Ethereum price. In such a case, traders would place new entries as ETH bounces off support at $1,400 and $1,200 if declines increase.
The path with the least resistance is downwards, according to insight from on-chain data provided by IntoTheBlock. From the IOMAP model below, we can deduce that there are bigger hurdles to the upside than on the downside.
Approximately 2.29 million addresses purchased 9.67 million ETH between $1,576 and $1,619. If bulls managed to push Ethereum into an uptrend, growth may be stifled in this range, especially if some investors decide to sell at their respective breakeven points.
On the other hand, Ethereum price faces weaker support areas, which if declines intensify, might not hold steady. In addition to the technical support at $1,400, ETH may have to look down to $1,200 to shed off the selling pressure. The last line of defense sits at $1,200 and might be the cheapest investors will ever buy Ethereum.
We cannot rule out the possibility of a recovery from the 100-day EMA (in blue) at $1,444 just yet. Hence, traders should not be hasty with the decisions they make. Remember investor confidence would improve if Ethereum bounces off this support line.
Investors should also consider the possibility of Ethereum price dropping below the 100-day EMA on the daily chart to validate a breakout to $1,400, $1,300, and worse $1,200.
Ethereum Alternatives To Buy Today
Before buying ETH, investors may want to consider some of the best crypto presales in the market. A dedicated team of experts reviews various tokens every week to come up with a list of the best altcoins to buy as you build your crypto portfolio.