Ethereum (ETH) Likely To Slide Below $130 If Price Closes Below 200 Day MA

Ethereum (ETH) Likely To Slide Below $130 If Price Closes Below 200 Day MA

Ethereum (ETH) has made a sudden move to the upside just like Bitcoin (BTC) although not as intense. This is quite surprising to see as usually altcoins rally a lot more than Bitcoin (BTC) whenever the market recovers. The fact that this did not happen should be a cause for alarm in itself as to what could be the catalyst behind this move and whether or not this is sustainable. On surface, the answer is clear. The daily chart for ETH/USD shows that the price is struggling to break past a strong trend line resistance that it has failed to breach since December, 2018. The fact that this resistance coincides with the 200 day moving average has made it a very strong resistance level to be breached in one go.

On the other hand, if the price faces a strong rejection and closes below the 200 day moving average, the market will take it as a strong bearish signal which will pave the way for further downside. This has really put Ethereum (ETH) in a tough spot. This move came around the time when more than half of the traders in this space were sleeping. As the majority of retail traders wake up to see good news on Crypto Twitter and the mainstream media, most of them are going to start looking to buy. The whales are going to dump on them slowly and steadily while they buy. This is exactly what is happening at the moment and we could see it continue for a while throughout the day as bags of Ethereum (ETH) change hands.

If we look at the daily chart for ETHUSDShorts, it all lines up. The number of margined shorts has once again declined to its long term support which means the retail bears have seen their moral shattered. As we keep on saying in our analyses, the majority is wrong most of the time in financial markets. Although the retail bears could be considered very bold people to be able to take such risks when the market is so close to its true bottom. However, herd mentality does not just apply to bulls vs. bears. There are herd within bulls and bears that go with the flow. Others on the other hand do their due diligence and recognize patterns and opportunities without giving in to emotions or majority sentiment.

While the average retail bear might be concerned to see that the number of margined shorts has declined so much in the past few weeks, for professional traders most of whom happen to be contrarians, this is an opportunity. It is starting to feel like the bulls are experiencing the same level of euphoria that they once did when the price was close to the top. Whenever the majority starts to think the same way, it is usually a sign that the exact opposite is likely to happen. A lot of people expected Bitcoin (BTC) to hold its ground but to the surprise of many it fell below the $6,000 mark and the rest is history. Ethereum (ETH) is a lot more vulnerable than Bitcoin (BTC) and very few people would be interested in holding on to it during a financial meltdown.

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