Ethereum (ETH) recently saw a strong rejection at the $270 resistance level and has now begun its decline towards the bottom of the ascending channel it has been trading in. The price did manage to rise above the $270 mark but it failed to close above it. That being said, it did close above the 1.272 Fibonacci retracement level which was a false bullish signal as the price declined below that level and managed to close below the 1.272 Fib retracement level the next day. ETH/USD flash crashed to $223 but bounced strongly off it. However, that did not stop it from starting the next day in red and declining towards that mark again. RSI on the daily time frame shows that the price just topped out above $270 and is now due for a correction.
A decline to the bottom of the ascending channel is due in both the bullish and bearish cases. The bulls would expect the price to test the 61.8% fib retracement level as support and bounce strongly off it to resume rally towards higher levels. The bears on the other hand expect the price to break this ascending channel and fall towards lower levels. Taking both cases into account, it would be reasonable to say that the price could still rally once more after declining to the bottom of the ascending channel. This means that the bears might have to wait a little longer to get what they want as the whales might want to capitalize on the bullish euphoria that still persists in the market. As long as there are people who will buy the dream, the whales will sell it to them.
The daily chart for ETH/BTC points to a gloomy outlook for Ethereum (ETH) against Bitcoin (BTC). It shows that the recent gains that Ethereum (ETH) and other altcoins made against Bitcoin (BTC) may be lost as the altcoin market takes a hit with the next downtrend. As we have seen in the past, when Bitcoin (BTC) falls, altcoins fall a lot more aggressively. ETH/BTC broke below a critical trend line support and has now tested it as resistance. As expected, the price faced a strong rejection at the trend line support turned resistance and is now expected to decline towards the 50 day moving average.
The number of margined shorts is still reluctant to rise even though ETH/USD had a massive buying frenzy the past few weeks. Retail bears seem to have been unnerved by the recent buying frenzy as they now fear that anything could happen. ETHUSDShorts faced a strong rejection at the 50 day moving average and is expected to decline towards the bottom of the ascending channel. This means that retail bears are not ready to step up just yet but the whales might have different ideas. The bulls are still too excited and market makers might want to give them just one more opportunity to buy the dip before they crash the price again just like they did yesterday.