Ethereum (ETH) is primed for a major decline after the price closed below the 200 Day EMA yesterday. This is a very bearish development for ETH/USD considering the price is already struggling to break past the strong resistance at $182. Now that the price has plunged below the $163.84 level, it is on the verge of major decline if it fails to break out by the end of the week. There is not much Ethereum (ETH) could do at this point as the odds are against it. The Stochastic RSI has topped out on the daily time frame and it has been overbought for the past few weeks now. In other words, ETH/USD is long overdue for a major decline. The ascending triangle that the price is trading in could break to the downside if Ethereum (ETH) closes the week below $159.
It is surprising that a lot of analysts calling for a rally towards $200 or higher levels so innocently ignore the major resistance around $182.87. This is a strong support turned resistance that will be extremely difficult to breach. Lest we forget, this is the market structure that ETH/USD broke when it fell below it on 19th November, 2018. So, here is the take away from all this. Ethereum (ETH) shoots up, runs straight into a strong support turned resistance and faces a rejection while being inside a bearish pennant and the mainstream media is calling for a rally towards $200. This is a strong indicator that people are still way too bullish in this market and trend reversals do not occur like that. Whenever the trend reverses, the bullish resolve is completely shattered prior to that. The mainstream media as well as the general public would think and say Ethereum (ETH) is dead.
So far, the sentiment is so positive that investors are willfully ignoring the alarming signs staring them in the face. If we look at the daily chart for ETH/BTC, we can see that the price broke the bear pennant to the downside. There is no reason to believe that ETH/USD cannot meet the same fate. In fact, the most likely scenario is that it will see a lot worse than this. Now, imagine for a moment that if ETH/BTC is to turn bullish again and rise from current levels, it will have to visit the trend line support it broke as a strong resistance. So, there is absolutely no reason to be bullish on Ethereum (ETH) or any other cryptocurrency at this point. If anything, investors should be alarmed as to what caused the rally and why the market is seeing pumps and dumps instead of a sustained rally.
There is something a lot more alarming than the recent pump and that is the reaction of the crypto community to that pump. It shows that people are still too optimistic. Remember, during the last market cycle of 2014-15, the Mt. Gox hack happened which completely shattered the community. Very few people actually believed the price was going to recover from there. A lot of people gave up and when the price was close to ending the bear market, even fewer people were interested to buy. Considering the outlook of major financial markets and the global economy, I would not be surprised to see something devastating like Mt. Gox that would push Ethereum (ETH) off the cliff and towards its true bottom in the weeks ahead.