Ethereum (ETH) is unlikely to fall below $200 anytime soon. The recent move below $200 was the liquidity hunt the market makers needed to pave the way for a move to the upside. Now, it may still take a while but that is what we expect to happen eventually. If we take a look at the daily chart for ETH/BTC, we can see that Ethereum (ETH) is struggling to break past the critical 127.2% fib retracement level against Bitcoin (BTC). We can also see that the price keeps on retesting this level. The more it keeps testing this level, the higher the probability that we will eventually see a break past that. When the price breaks past the 127.2% fib retracement level, it will finally be in the clear to touch the all-important support turned resistance against Bitcoin (BTC).
One of the reasons we do not see the price falling below $200 any time soon is because we see this move to the upside before further downside can follow. Ethereum (ETH) has to move against Bitcoin (BTC) and face a rejection there in order for the price to decline further. At the moment, neither the bulls nor the bears are sure as to where the price could go from here. It keeps on testing the 1.272 fib retracement level but it has yet to move above or below it. If the price declines at this stage, we would see it decline to the 161.8% fib retracement level but we would still be expecting a move to the upside before further downside can follow. This is a similar situation to the price testing the $6,000 zone again after declining below it to $3,200. As we saw, the price cut through that level like knife through butter and most traders would be expecting the same thing to happen again which is why I don’t think it will.
Meanwhile, Ethereum (ETH) has already broken the ascending channel against the US Dollar (USD) and is now trading in a pennant. This pennant was breached to the downside but the price ended up closing the day well inside the pennant above the trend line support. We are now very close to a breakout in Ethereum (ETH) which could come to fruition as early as this month.
The pennant does not have a lot of room for ETH/USD to trade sideways which is why we are very likely to see a big decisive move this week. Ethereum (ETH) like most other coins is now in a better position to rally higher if the bulls can assume control. RSI on the daily time frame points to plenty of room for a rally to the upside. The price might get stopped out at the 50 day EMA if it ends up rallying that high but it is still a big move nonetheless, one that could pave the way for the next downtrend as ETH/USD turns the pennant into a bear flag.