Chart for ETH/USD (4H)
Ethereum (ETH) has been in the eye of the hurricane for the last few weeks. The price has taken wild swings to both sides. The 4H chart above for ETH/USD shows that the price has to take a definitive stand now. Ethereum (ETH) has currently found support at the 0.786 Fibonacci retracement level which is a very critical level for the future price action of Ethereum (ETH). If Ethereum (ETH) breaks below this level, it will be a sign of extreme weakness and the price can then be expected to break the long term descending channel and fall even lower. This might coincide with a similar break of market structure in Bitcoin (BTC).
However, if that were to happen, it would be completely out of the ordinary and Ethereum (ETH) will then have to enter another bear market. It cannot be simple drop and bounce back especially if there is a close below market structure on the daily or weekly time frame. The market must then enter another bearish cycle. Consider all that is going on in the crypto space as well as the changing macro economic conditions on a global scale, it is highly unlikely for that to happen as much as many in the crypto currency space would want that to happen.
Chart for ETH/BTC (1W)
Why would the majority want the price of Ethereum (ETH) to fall further and not reverse? There are two major players rooting for this to happen. The first interest group comprises of sentiment investors, also known as the ones who buy the top and sell the bottom. In early 2017, the crypto community did not have a lot of new people. Many investors, me included, were those who had been in this space for a long time and had seen ups and downs over the years.
However, in the latter half of 2017, a lot of new money entered the market which did help push the prices in the market in general and that of Ethereum (ETH) in particular. However, it did not come without its harms. This group that bought on FOMO sold on FUD. So, practically the majority of people in the space were those guys who are now out of the game because they panic sold, at a loss of course. So, now they want the prices to fall back lower than they were before the rally in 2017 so that they can make the money that they lost by panic selling.
The second interest group comprises of whales who see the macro economic trends changing and an unprecedented global financial crisis around the corner. These people want to accumulate all they can. So, if the price is going down, they might even help it go down by dumping some of their own Ethereum (ETH). However, they are not going to let it slip below a point where it becomes difficult for them to make returns on their investment as the market enters another bear trend.