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Ethereum (ETH) Faces Short Term Resistance But Significant Downside Unlikely
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Ethereum (ETH) Faces Short Term Resistance But Significant Downside Unlikely

Ethereum (ETH) has already been the victim of a brutal market correction. However, recent developments show that the price could still fall back towards $103 for a retest of the yearly low. That being said, ETH/USD has now a strong trend line support that might prevent that from happening. Instead, we may see a rally towards $150 towards early 2019. However, the possibility of a retest of the yearly low is still there and needs to be accounted for in entering positions. The past few weeks have seen significant volume return to the market and trading interest in Ethereum (ETH) is on the rise. RSI for ETH/USD also shows that we have either bottomed out or are very close to bottoming out. The risk/reward for a long term position at this point is very attractive.

Since the beginning of the correction, Ethereum (ETH) has been trading in a descending channel. The price has now reached the bottom of that descending channel. The only way it could break out of this channel would be if the price dropped below $100. So far we have seen nothing of that sort happen and the likelihood of that happening in the future remains low as well. However, previously when the price would reach the bottom of this descending channel, we would see a strong recovery towards the top of the channel. However, this time there appear to be no bulls in sight. The bears are getting more confident by the day whereas the bulls remain heartbroken. A lot of investors that bought Ethereum (ETH) around $1000 either sold at major losses or are still holding. They do not feel inclined to buy more as they fear further downside.

Sometimes, it is important to put everything in perspective such that there is no room for emotions in decision making. If we look at the above daily chart for ETH/BTC, it is clear that Ethereum (ETH) has now bottomed out against Bitcoin (BTC) for the third time since late 2017. The trend line support that ETH/BTC is currently trading on has held for a long time and is extremely unlikely to be broken at this point. Furthermore, the 21 Day EMA is now very close to the price and ETH/BTC can easily break above it around early 2019. That being said, it is going to be a long time before we see a new all time high for Ethereum (ETH) again.

There is a time for buying and there is a time for selling. A lot of people who bought around August or September last year and sold around January 2018 made a killing on their investment. However, there was an even better time to buy and that was after the correction of 2015. If they had bought back then, they would have seen what is possible in this market. Right now, we are in the same phase as we were back in 2014 and we are now heading towards the same phase in 2015. This right now is the ideal time for accumulation at the best possible price entry for long term. In five to six months from now, this opportunity will be gone.

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Fakhan

I work as the key Trading Analyst for Crypto Daily and provide the team with regular analyses and updates regarding the technical performance of all cryptocurrencies on the market. I am responsible for the production of articles and posts for Crypto Daily’s own technical analysis section and spend my time monitoring and commenting on the varied moves the markets make on a daily basis.

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