Analysis

TA: Ethereum Starts Corrective Decrease, Why Recovery Could Be Limited

Ethereum formed a short-term top near $ 620 and started a sharp decline against the US Dollar. ETH price is correcting gains and it could revisit the $ 500 support zone.

  • Ethereum started a downside correction after it failed to stay above the $ 580 support.
  • The price traded below the $ 550 support and the 100 hourly simple moving average.
  • There was a break below a major declining channel with support near $ 565 on the hourly chart of ETH/USD (data feed via Kraken).
  • The pair tested the $ 507 level and it seems like there are chances of more downsides.

Ethereum Price Corrects Lower

After forming a short-term top near the $ 620 level, Ethereum started a sharp downside correction. ETH settled below the $ 600 level and it failed to stay above the $ 580 support level.

A clear break below the $ 580 support level sparked a strong decline (similar to bitcoin). Ether price declined heavily below the $ 550 support and it even settled well below the 100 hourly simple moving average. There was also a break below a major declining channel with support near $ 565 on the hourly chart of ETH/USD.

The price declined below the $ 520 support and traded as low as $ 507. It is currently recovering higher and trading above the $ 525 level. Ether is testing the 23.6% Fib retracement level of the recent decline from the $ 605 swing high to $ 507 low.

Ethereum Price

Source: ETHUSD on TradingView.com

On the upside, there is a major resistance forming near the $ 550 and $ 555 levels. The 50% Fib retracement level of the recent decline from the $ 605 swing high to $ 507 low is also near the $ 555 level.

The main resistance is forming near the $ 580 level and the 100 hourly simple moving average (the recent breakdown zone). A successful close above the $ 580 level is must to move back into a positive zone.

More Losses in ETH?

If ethereum fails to recover above the $ 550 resistance, there could be more losses. The first major support is near the $ 515 level, below which the price could retest the $ 507 low.

The main support is near the $ 500 handle. A clear break below the $ 500 handle might start a substantial decrease. In the mentioned case, the price could even test $ 450.

Technical Indicators

Hourly MACDThe MACD for ETH/USD is now gaining momentum in the bearish zone.

Hourly RSIThe RSI for ETH/USD is now well below the 30 level.

Major Support Level – $ 500

Major Resistance Level – $ 550

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