Trading

Price analysis: Ethereum stays below the key trend line

September 6, 2019

Two weeks ago, we looked at how Ethereum has been moving lower recently in the price analysis blog post. More specifically, we looked at a bear flag formation, which had been developing and pointing towards the levels below the $80 handle. Since then, the price has continued to dip lower, falling around 10% and further approaching the crucial confluence of support around the $160 mark. 

Technical perspective of ETH/USD

Taking a technical perspective, we see that the ETH price action has been wedging in the last couple of days, pointing out that the price may suddenly burst in one or the other direction very soon. Overall, Ethereum is comfortably trading below both the 100 DMA and 200 DMA. 

Furthermore, the price is also below the major bull/bear trend line (the orange line), as well as the key 61.8% Fibonacci retracement. Ethereum bulls are fighting a triple negative here. 



ETH/USD weekly chart
ETH/USD weekly chart


The death cross

Let’s now take a closer look at the much-discussed scenario for Ethereum, the so-called “death cross”. 

This pattern takes place when the asset’s short-term moving average crosses below its long-term moving average, which indicates that a major sell-off is about to take place. The most common death cross scenario involves the 50 and 200 moving averages, as it is the case now with Ethereum. 

Just like with other chart patterns, the death cross is not 100% reliable. The chart below shows a situation from April 2018, when the death cross occurred in Ethereum. The moment the 50 MA moved back below the long-term 200 MA on a daily chart, was the moment that Ethereum started moving sharply higher, and not lower. More precisely, Ethereum gained as much as 113% over the next four weeks, rallying from $391 to $838.

ETH/USD Death Cross
ETH/USD Death Cross April 2018


Moving away from the death cross, it looks like there is only one hope for the Ethereum bulls short-term, and that is to stay above the key horizontal support (the previous resistance), which sits around the $167 mark. 

A move below this level will likely pave the way towards much lower levels, with the 78.6% Fibonacci retracement as the first support beneath the major confluence of support. The most bearish scenario, at this point in time, is a completion of the bear flag pattern.

On the upside, the bulls may try to push the price above the major supporting trend line, which should coincide with the bullish break of the wedge. However, that is easier said than done as this is clearly a mountain to climb for the bulls given the size of this task. 

Overall, a lot will depend on the movement of the entire cryptocurrency market and its leader - bitcoin, which finds itself in a similar situation. A break of the $9,000 handle may push the entire cryptocurrency market off the cliff. 

Meanwhile, Buterin speaks about future Ethereum projects

Ethereum’s co-founder Vitalik Buterin continued sharing his optimism regarding the future outlook of the world’s second digital coin. Buterin was also speaking about the upcoming launch phase zero of Ethereum’s mammoth scaling project, scheduled for early next year.

“Blockchains as they currently exist are in many ways a joke, right? Like 15 transactions per second… you’re not going to run the world economy on top of that… So I’m definitely just really excited about turning Ethereum into a system that we can really, fully be proud of,” he said on the 80,000 Hours podcast.

Speaking about the launch of proof-of-stake blockchain at rivaling Cosmos, Buterin admitted he has learned a lot. Cosmos’ ambitious project aims to connect all blockchain projects and develop an Internet of Blockchains (IoB). 

The project focuses on three main areas: Enhancing scalability, ease of use and sovereignty.  


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