As Ethereum Plummets To Levels Not Seen Since January 2021, Here’s The Next Likely Reaction

Ethereum ETH/USD was diving over 13% on Saturday, in sympathy with Bitcoin BTC/USD, which was plummeting over 10% lower. 

Price action in the crypto market has been predictive of the price action in the general markets recently, and traders and investors of stocks will likely be watching Bitcoin and Ethereum this weekend as they tank.

The harsh reality is that crypto has entered into a winter cycle, with Bitcoin and Ethereum now trading down 73% and 80%, respectively, from their Nov. 10 all-time highs and now that the crypto sector and the general markets have begun to trade in tandem, it doesn’t look positive for the stock market, at least in the near-term.

During downward cycles there are always bullish bounces, however, and Ethereum looks set to bounce over the next few days.

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The Ethereum Chart: After trading sideways in consolidation for four 24-hour trading periods between June 14 and Friday, Ethereum broke down bearishly on Saturday. The price action has confirmed the crypto is still trading in a downtrend, with the most recent lower high printed on Thursday at $1,421.80 and the most recent confirmed lower low formed at the $1,012.72 mark the day prior.

• On Saturday, Ethereum was working to print a bearish Marubozu candlestick by closing near the low-of-day. If that happens, Ethereum is likely to trade lower on Sunday. The second most likely scenario would be that the crypto trades sideways again to print an inside bar, which would lean bearish because Ethereum was trading lower before forming the pattern.
• If buyers come in above the $900 level and cause the crypto to form a lower wick, Ethereum will print a hammer candlestick on the daily chart, which could indicate a bounce to the upside is on the horizon for Sunday’s trading period.
• A bounce to at least print another lower high will eventually come because Ethereum’s relative strength index (RSI) is measuring in at about 19%. When a stock or crypto’s RSI falls below the 30% level, it becomes overbought, which can be a buy signal for technical traders. It should be noted, however, that RSI levels can remain extended for long periods of time.
• Ethereum has resistance above at $1,081 and $1,245 and support below at $905 and $750.

See Also: Jeffrey Gundlach Correctly Predicted Bitcoin Would Retreat To $20K: Here’s His Next Call On The Crypto