Ethereum (CRYPTO: ETH) After falling below the critical psychological support zone by $ 3,000 on Monday, it bounced slightly off the level.
The cryptocurrency market has been declining since November 10, when Ethereum and Bitcoin (CRYPTO: BTC) reached record highs of $ 4,867.81 and $ 68,789.63., Each. Fear has not only entered the crypto sector, but has also had a far less negative impact on the general market.
Investors were surprised by the Federal Reserve’s decision to double the tapering of bond purchases and raise interest rates as early as March. As economist and trader Alex Krüger said in a Twitter thread on Sunday, the crypto sector is “at the farthest end of the risk curve.”
Ethereum seems to have an imminent bounce in the short term, but long-term traders realize that cryptocurrencies have a lot of work to do to give bulls confidence that they are at the bottom. Must be done.
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Ethereum Chart: Ethereum has been trading on a strong downtrend since December 23, when cryptocurrencies hit a high of $ 4,157.82, showing a consistent set of lows and lows on the daily chart. On Monday, Ethereum hit an even lower low at $ 2,928.69, but jumped from that level to the wick.
The price action shows that if Ethereum ends a 24-hour trading session for more than $ 3,000, the crypto will print a hammer candlestick. Hammer candlesticks are common at the bottom of the trend and may indicate that highs may come on Tuesday. However, even if the price goes up, Ethereum may print the next low and then head back to the low.
If the downtrend continues, aggressive bullish traders may have already chosen to enter the Ethereum position and plan to sell when the cryptocurrency prints its next low. More conservative bulls will want to wait for Ethereum to undergo a trend change daily or at least 4 hours before opening a position.
The Ethereum Relative Strength Index (RSI) is measured at about 29%, which also indicates a high probability of bounce. If the stock or crypto RSI reaches or falls below the 30% level, it will be oversold. This can be a buy signal for technical traders.
Ethereum resistance is $ 3,240 and $ 3,610.91, and support is $ 2,890 and $ 2,609.02.
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Photo: Courtesy of Tim Reckmann on Flickr