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Ethereum On The Cusp of a 450-Day Support Level
The daily technical chart for Ethereum reveals a bearish trend in the short term. After April’s deviation beyond the $2,000 resistance zone, Ethereum could not sustain its gains, signifying a shift in momentum from the bulls to the bears. Come July, the same resistance at the $2,000 mark was retested and confirmed, leading to the current bearish phase. As a result, ETH experienced a drop to a low of $1,550 by August 17 before recovering slightly.
Interestingly, Ethereum is now on a collision course with a significant ascending support line, situated at $1,500. This trendline, tracing back to the crypto’s rise from June 2022, has been an influential factor for 450 days. But it’s worth noting that the line hasn’t been tested since November 2022. Should Ethereum touch this line again, it would represent a 6% decrease from the current price. Alternatively, a rebound to retest the $2,000 mark would suggest a bullish move of about 24%.
Meanwhile, in related news, the Grayscale Ethereum trust has witnessed a noteworthy contraction in its discount, recording its lowest point this year at 26.64%. This dip followed an influx of applications for an Ethereum-based ETF. On the technological front, Ethereum’s visionary, Vitalik Buterin, mentioned that, despite notable advancements, the Ethereum blockchain still grapples with issues concerning privacy, security, and scalability.
Is The RSI Indicating A Possible Reversal?
While the recent price movement suggests bearishness, the RSI (Relative Strength Index) is painting a more optimistic picture. The RSI serves as a momentum gauge, helping traders decipher if a market is in overbought or oversold territory.
A reading above 50 on the RSI generally points towards a bullish phase, whereas a reading below indicates bearishness. On August 17, Ethereum’s RSI plummeted to 21, marking its lowest point since June 2022. But post this drop, the RSI has shown a recovery, establishing a bullish divergence. Such divergences, where momentum rises amidst a price dip, are frequently precursors to substantial bullish runs.
Further boosting the bullish sentiment is the RSI’s recent exit from the oversold zone. To put this into perspective, the previous such move spurred a mammoth 145% price jump, culminating in Ethereum’s current annual high.
However, traders should tread with caution. If Ethereum breaks below its long-standing ascending support line, the bearish sentiment would dominate. A potential fallout could see Ethereum drop by 30%, taking it down to the crucial support level of $1,100.
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