Ethereum (ETH) Could Decline To Another Falling Wedge Before Reversal

Ethereum (ETH) will see a trend reversal sooner or later. We have a very bullish setup on the daily time frame but before we move on to discuss further, let us understand that just because a bullish setup exists on the charts does not mean that the trend is bullish. The trend is bearish so far and there is no reason to get in front of it especially if you are buying on margin. That being said, it would be a good time to start looking to buy because there is blood on the streets and there may soon be more blood on the streets if Ethereum (ETH) declines further. Stochastic RSI on the daily time frame is now in the oversold territory and the RSI is also at a point of a potential trend reversal. 

We might soon see a bullish reversal but before that happens it is likely that the price could decline further especially as the market makers carry on with further stop hunting and shaking out traders who have been trying to buy the dip recently. This is how it happens most of the time and it could happen again. This week’s close will be important to determine the direction ETH/USD will take next week but so far there is a lot of confusion as the bulls and the bears fight for control. It is possible that we could see further upside short term which might be followed by a strong decline to complete this move to the downside before the trend reverses. It is true that there is a lot of fear in the market but the bulls still seem hopeful and they are trying to catch the bottom here. This could mean that the sentiment is yet to turn more pessimistic.

The daily chart for Ethereum Dominance (ETH.D) shows that dominance is at a vulnerable point. It has declined below the 38.2% fib retracement level and has been unable to break past it. If this continues then we might see the 21 day EMA cross below the 50 day EMA and another downtrend could follow short term. That being said, I’m still not convinced that we will see the major downtrend in ETH/USD begin before Ethereum Dominance (ETH.D) tests the 200 day EMA. 

We could see a short term downtrend nonetheless and that would be in line with the extended stop hunt that we could see near term. If Ethereum Dominance declines below the 50 day EMA then that would be a very bearish development and we would have to be very careful buying Ethereum (ETH) or any other cryptocurrencies at that point. So far, Ethereum (ETH) has made impressive gains for the day but traders need to be wary of another potential decline near term. The price is long overdue for a correction to the upside but the market can stay irrational longer than we can stay solvent. So, it is important to manage risk effectively and be prepared for all outcomes.