What's in store for Ethereum (ETH) after a 7% drop over the weekend
Date: 2023-07-18 Author: Karina Ziganova Categories: BLOCKCHAIN
On July 14, Ethereum updated its annual maximum. However, almost immediately after that, ETH fell, jeopardizing all previous gains.
ETH is now trading below the critical area of convergence of resistance levels, and price action in this area could determine further trend direction.
Ethereum failed to develop a bullish breakout
As the results of technical analysis show, the daily chart for ETH gives mixed signals. This is due to both the readings of the indicators and the price dynamics.
On June 21, the price of Ethereum made a bullish breakout of the downward resistance line. After that, on July 14, it peaked at $2029. This maximum also led to a breakthrough of the $1940 resistance area. This is a very important resistance because it is both a horizontal resistance area and a Fibo level of the 0.618 retracement.
As a result of all these movements, it seemed that ETH had started a bullish trend reversal that would lead the token to new highs. However, shortly thereafter, the price fell below the $1940 area, making the previous bullish breakout null and void (green circle). The $1940 mark is now expected to act as resistance again.
Technical indicators give inconclusive signals. The daily Relative Strength Index (RSI), which traders rely on to assess the market situation, is currently declining, but still remains above the 50 mark, indicating uncertainty about the direction of the trend.
ETH Forecast: Is the Correction Over?
Meanwhile, the wave analysis of the shorter 6-hour chart also shows contradictory readings.
Wave analysis suggests that between June 15 and July 3, the price of ETH completed a five-wave bullish structure. Since then, it has been corrected within the A-B-C structure (black) within the ascending parallel channel.
However, whether the correction has already been completed or the price will reach another low remains unclear.
At the moment, the ratio of A:C waves is exactly 1:1. This indicates that the correction is complete. However, ETH could fall to the $1790 support level if the price makes a bearish breakout from the channel, giving the A:C waves a 1:1.61 ratio.
As such, ETH's prediction will be determined by whether the token makes a bearish break out of the channel or bounces back. In the event of a breakdown, ETH could fall to $1790. However, if we see a rebound, then growth to a new annual high and the next resistance at $2500 is likely.
