Ethereum (ETH) suffers rejection and falls to a key medium

IN BRIEF

  • Ethereum’s course evolves in the $390 support zone.
  • The next support and resistance zones are at $365 and $420.
  • The technical indicators in the daily time scale have started to turn bearish.

The course of the Ethereum (ETH) has been in considerable pain since its abrupt fall at the beginning of September.

The course is currently at an important support zone. If it loses this support zone, this would go a long way towards confirming a downward trend.

Ethereum struggles to maintain its support

The ETH share price peaked at $489.57 on September 1, but then fell sharply the next day. It continued to decline, reaching a low of $311.4 on September 5. Since then, the price has been on the rise.

However, on October 22nd it was rejected from the $420 range. This zone corresponds to the 0.618 fibonacci level of the entire decline and is now expected to hold up.

The price is currently trading in the $390 range, which appears to be a support zone. That said, ETH is very close to falling below it. In that case, the next support zone would be at $365.

Technical indicators in the daily chart are turning bearish, but have not yet confirmed a downward trend.

  • The MACD is falling, but it is not yet negative and the signal line is above 0.
  • The RSI is also declining and has fallen to the line of 50.
  • The stochastic oscillator is on the verge of generating a bearish cross.

Thus, a confirmed passage below the $390 zone would confirm a downward trend, knowing that it would also likely push the indicators into negative territory.

Next move

CryptoNewton, the cryptocurrency trader @CryptoNewton, says that ETH’s price may eventually overtake its current upward channel. Similarly, he pointed to a rally that could push the price to new historical heights.

Beyond the bearish aspect of the technical indicators, it seems that the price is moving within an ascending parallel channel. Knowing that a slow and jerky movement within parallel lines is often corrective, it may be that the rise is a correction. The latter could then lead to a decline to new lows, rather than being a movement that causes new highs as outlined in the tweet.

In this case, the price has completed a corrective structure in A-B-C (in blue) and should soon pass under the channel. A rally above the top of wave C, at $420.74, rendered this scenario invalid.

On the contrary, the only possibility for a bullish impulse would be if the course is about to complete a 1-2/1-2 wave formation (in blue and red). In this case, wave C proposed in the previous image would correspond to the peak of the second wave 1 (in red).

Even this scenario suggests a possible fall towards the canal support line. Then, that said, the course would probably enter a rally.

A decline below the trough of wave 2 (in blue) to $313.9 would reject this wave count.

Conclusion

In conclusion, it is likely that Ethereum’s trend has been bearish since the fall of 3 September, and that the current rally is proving to be corrective. A drop below $310 would confirm this.

On the contrary, a rise and a passage above the current parallel upward channel would render this scenario invalid and would indicate that the ETH will increase. At the time of writing this analysis, this seemed implausible.

Caution: Crypton trading is a high risk business and may not be suitable for all investors. The opinions expressed in this article do not reflect those of BeInCrypto.