Ethereum (ETH) has declined back into the descending channel and has now closed below the 38.2% fib extension level on the 4H time frame. This is a major bearish development that hints that further downside may soon follow. Most professional traders are aware as to what is going on at this point but they might want to see a bounce to the upside for better entries to short sell. That being said, I don’t expect ETH/USD to see relief any time soon. It is very likely to decline down to the $185 mark around the 61.8% fib extension level to find temporary support before it rallies towards the top of the descending channel again. Eventually, it is very likely to decline below $80 to find its true bottom.
Like most other altcoins, Ethereum (ETH) dances to the tune of Bitcoin (BTC) but it has been making some moves of its own recently. That has come to an end now and recently we have seen the price declining a lot more aggressively than Bitcoin (BTC). Whether or not this trend remains intact has to be seen but there is no denying that Ethereum (ETH) made a lot of big moves against Bitcoin (BTC) and now it is time for some long overdue correction. The price has declined within the descending channel against the US Dollar but now it is time for it to correct in a similar manner against Bitcoin (BTC) as well. Lest we forget, a lot of useless ICOs were built on the Ethereum (ETH) blockchain and when the proverbial hits the fan, which it will in the months ahead, then some people are going to come knocking on Ethereum (ETH)’s door and you don’t want to be holding Ethereum (ETH) when that happens.
Some investors and cryptocurrency enthusiast don’t like it when we talk about mitigating our risks. They want to keep talking about how Ethereum (ETH) is a wonderful invention and what it is going to be worth in five or ten years from now. Well, we do not know what is going to happen in five or ten years to Ethereum (ETH). As traders, we are more interested in what is happening now. Even if we were aware that Ethereum (ETH) is going to be a widely used blockchain in five years from now, as investors we would still want to maximize our returns by selling high and buying low.
The daily chart for ETH/BTC shows us that the pair is ready to decline within the descending channel. This is similar to what Ethereum (ETH) did against the US Dollar except it had a false breakout in the case. In the case of Ethereum (ETH) against Bitcoin (BTC), we saw a rejection at the 38.2% fib retracement level and that was the end of it. The price started to decline from there and is now very likely to see the bottom of the current descending channel in the weeks and months ahead.