Ethereum price analysis - new descending channel
Ethereum price soared to $863, rising from Sunday's day low of $834.46. The market seems to be moving along a new descending channel, so we will mostly see ethereum price drop down again near $830, before the market's bulls can take the upper hand again.
After dropping down to a day low of $834.46 during Sunday's later trading sessions, ethereum price began rising reaching $863 during Monday's sessions, at the time of writing of this ethereum price analysis. Even though the market seemed indecisive during later parts of last week, a new descending channel has become evident since the beginning of the current week. As such, the market seems to be currently moving along a new downwards trend line, whose slope is relatively small. How low can ethereum price go before the market's bulls can take the upper hand again?
Lower lows and lower highs evident on the 2 hour ETHUSD chart:We will examine the 2 hour ETHUSD chart from Bitfinex, while plotting the 50 period SMA, the 100 period SMA, and the Bollinger Bands indicator, as shown on the below chart. We can note the following:
- To identify key resistance and support levels at the current market conditions, we will plot Fibonacci retracements extending between the high recorded on February 18th ($979) and the low recorded on February 23rd ($787). Ethereum price has just surpassed the 38.2% Fibonacci retracement ($860.34) reaching $863. Most probably, the market's upwards momentum won't be able to sustain ethereum price above this key resistance level, as evidenced by the relatively long upwards shadows of candlesticks around this price level.
- Since February 27th, the market has been progressively recording lower highs and lower lows, As such, a new "descending channel" can now be observed (the two parallel downwards sloping blue trend lines on the above chart). During the past seven days, ethereum price has been cycling throughout this descending channel. Each cycle consists of a bullish wave, which is reversed by the descending channel's upper border, followed by a bearish wave. The descending channel's lower border initiates reversal of the bearish wave, so that a new cycle begins. Consequently, ethereum price is now starting the bearish phase of the cycle and is expected to drop down near the next support level around $830 within the next 24 hours.
- After attempting to test the lower border of the descending channel within the next 24 hours, ethereum price will start rising again towards the channel's upper border. On the upside, target resistance levels are around $860.34 (38.2% Fibonacci retracement) and $883 (50% Fibonacci retracement). On the downside, target support levels are around $830 (23.6% Fibonacci retracement) and $812.
- Ethereum price is now below the level of the 100 period SMA, but above the level of the 50 period SMA. As shown on the chart, the 100 period SMA is resisting advancement in the upwards direction. If the market's bulls manage to take price above the level of the 100 SMA, we can expect the market to break out of the descending channel and start a new bullish wave. Also, candlesticks are currently tangential to the upper Bollinger band, so ethereum is somehow overbought as per the current market conditions. This also confirms that ethereum price will mostly drop down towards the level of the descending channel's lower border.