26th Aug 2020
Ethereum, can be seen declining constantly over the past week after the asset touched a $430 high since August 2018. The second largest crypto asset is struggling to hold above the $400 resistance, while trading at a weekly high of $419, $418 and $411 to closing at weekly low of $383 yesterday. The asset has revisited it’s $380 initial support of the month. The week suggests that the asset made few attempts to hold above the $400 resistance, eventually resulted futile. By the time of writing the asset is trading at $383 slightly above the $380 support, a sign in favour of the bulls.
SHORT TERM PRICE PREDICTION: ETH/USD
(Source : https://in.tradingview.com/chart/h9RJyD9v/)
Examining from the technical levels, the Relative Strength Index (RSI) a momentum oscillator estimating the extent of latest price changes (Check: https://www.investopedia.com/terms/r/rsi.asp ) currently stands at 51% after hitting a monthly low of 49% yesterday when the asset traded at $369 low experiencing a 5.9% decline in the price from day before yesterday. The indicator can be said holding above it’s 50% support, preceding charts indicate anything below that leads to an oversold market condition observed after a few days.
However, if the asset managed to keep above the 50% support over the coming week the situation might be avoided.
Similarly , The Bollinger Band ( check: https://www.investopedia.com/terms/b/bollingerbands.asp)
Another indicator measuring the market condition, experienced the asset touching it’s lower band when the price hit a $379 low last Friday, which usually means an upcoming oversold market condition for the coming days.
Both the indicators, suggests that the bulls might be losing their hold on the current market situation and the bears might have an upper hand for the coming week.
Moving Forward, Moving Average Convergence Divergence (MACD) ( check: https://www.fidelity.com/viewpoints/active-investor/how-to-use-macd) another momentum trend generating oscillator indicates an extensive selling pressure from the bears as the indicator currently holds up at a -8.75 (the lowest point of the month ) with the MACD further drifting away from the signal line suggesting the downtrend is likely to continue.
Moreover, it can be noted that over the past week the MACD can be seen crossing and falling below the signal line when the market closed at a bearish $431, this typically means that the bears have an upper hand and the asset will be proceeding in their direction. This was evident when the asset experienced a bearish momentum over the week further closing at $383 (below the $390 weekly support) with a 5.99% drop from the previous day, Yesterday.
Furthermore, the divergence between the price and Shorter EMA (EMA 26) (check: https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical-indicator-guide/ema)
has dwindled visibly over the past week, firstly seen when the price closed at $385 while experiencing a $418 high on the very same day. Large influence of the profit motive bears looking for a beneficial exit from the high can be said responsible for the major fall of price on the same day.
On the contrary, the shorter EMA-26 can still be seen rising above the longer EMA-50 advising an incoming bullish trend till the asset reaches close to EMA-50.
Incorporating the above, it can be said that if the bulls manage to keep the asset above it’s $382 initial support over the mid-week an uptrend likely to set the asset closer to it’s $400 resistance seems possible. On the other hand, price falling below $378 support over the same period might see an incoming short bearish trend till the next $368 support.
Key support level: $382, $378, $368
Key Resistance level: $400, $412
MORE SHORT TERM REFERENCES: