- Ethereum price is currently displaying a triple bearish divergence on the four-hour timeframe.
- A 10% retracement will provide long-term holders an opportunity to accumulate before triggering a 20% upswing to $2,022.
- Invalidation of the bullish thesis for ETH will occur below $1,422.
Ethereum (ETH) price shows an exhaustion of bullish momentum after producing a clear sell signal on the four-hour timeframe. This development could result in a quick drop, but from a long-term perspective, it would be an opportunity to accumulate.
Read More: Assessing chances of Ethereum price rally to $2,400
Ethereum price sets the stage for long-term bulls
Ethereum price has rallied 34% in the last ten days and has set up a perfect place to trap late bulls. The equal highs at $1,841 and the bearish divergence seen on the momentum indicators are two reasons why investors that got in on the rally late will get punished soon.
Market participants can see that the Ethereum price produced higher highs since March 14, but the Relative Strength Index (RSI) and Awesome Oscillator produced lower highs. This non-conformity is termed as divergence and the declining momentum often leads to a reversal in price.
Therefore, Ethereum price could shed 10% and tag the $1,600 psychological level or the monthly level at $1,677.
While this 10% downswing is a good move for short-term traders, investors should note that this move could be a potential buy signal for long-term holders. If Bitcoin price keeps up its bullish outlook, this retracement will allow buyers to recuperate and extend the rally to $2,022. This move would constitute a 20% ascent for ETH.
ETH/USDT 1-day chart
While the optimistic outlook for Ethereum price makes sense, a breakdown of the $1,600 level would be the first sign to be cautious. If the selling pressure continues to build, leading to a flip of the $1,422 level into a resistance level, it would invalidate the bullish thesis for ETH.
Such a move could trigger Ethereum price to retrace lower and tag the $1,377 support level.
Also read: Why Ethereum will emerge victorious in the ongoing bull rally as Tether mints $2 billion USDT
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
This is why a mere 15% rally in Lido DAO price could be a game-changer for LDO holders
Lido DAO price is following the rest of the market due to the regulatory events that transpired in the last few days. However, the DeFi token is generally unlikely to pursue the path set by any other cryptocurrencies, including the likes of Bitcoin. This might play in favor of LDO.
LINK holders opt to sell as Chainlink price falls by 9% in a week, new investors on the rise
Chainlink price, after following the broader market cues, is nearing a key support level that was last visited by the coin in January this year. This has discouraged LINK holders to the point where selling has become a preferred option. However, newer investors are countering this selling by accumulating, preventing a severe decline.
Optimism price could rally 50% as network upgrade inspires new wave of OP adoption
Optimism (OP) price appears to have found support after a new buyer congestion zone came into effect to prevent the free fall. Accordingly, the Ethereum Layer 2 (L2) token is trading horizontally, giving bulls time to accumulate OP at affordable rates.
Binance CEO addresses chat records disclosed by the SEC
Binance CEO Changpeng Zhao has issued an internal address to company staff, asking them to focus on work and developing products people can use. The internal memo comes after the United States Securities and Exchange Commission (SEC) disclosed chat records between Binance employees in an attempt to support its case against the largest crypto exchange by trading volume.
Bitcoin: BTC targets $30,000 as short-term bias turns bullish
Bitcoin (BTC) price shows a clear sign of the bulls’ victory. After failing to trigger a steep correction, bears look now out of context, at least in the short term, allowing buyers to restart a minor uptrend.