Ethereum (ETH) adjusts after reaching a yearly high
Date: 2023-07-26 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Ethereum (ETH) updated its one-year high on July 14, but then began to decline and broke through the upward support line, confirming the correction. Will the $1800 area stand?
While price action reinforces a bearish breakout, wave analysis suggests that a bottom will be reached soon. After that, ETH will resume growth.
Ethereum broke through support
As the results of the technical analysis of the daily chart show, Ethereum gives mixed signals.
Since June 10, the price of ETH and the ascending support line (solid line on the chart) have been rising. As long as the line remained unbroken, the trend was considered bullish.
However, on July 14, the token began to decline and six days later made a breakthrough of the line. This is a sign that the previous upward movement has ended and a new one has begun, in a southerly direction.
The next nearest support is in the area of the long-term ascending support line (dotted line on the chart) at $1800.
The daily RSI index is bearish, supporting the fall in the price of Ethereum. Currently, this momentum indicator is declining and is below the 50 mark (red icon) indicating a bearish trend.
ETH Forecast: How Long Can the Correction Continue
Meanwhile, wave analysis on the shorter 6-hour timeframe supports the viability of the bearish breakout. However, it also indicates that the downward movement will end soon.
According to the Elliot wave chart, ETH has completed the formation of a five-wave bullish price structure (white) and is now in a corrective A-B-C structure. If this is indeed the case, then the price is currently in wave C, which will complete the correction.
The ratio of A:C waves as 1:1.61 will give us a low around $1780. This also coincides with the Fibo support level of the 0.618 retracement (white). Fibonacci levels are traditionally considered the most likely springboards for stopping and reversing the price after significant progress in any one direction. At the same time, it is Fibo 0.618 that often plays the role of the bottom, if the price decline was only a correction.
In this regard, the price of ETH is likely to complete the correction at $1780 and resume the upward movement towards the $2000 mark.
Despite the bullish long-term outlook, a fall in ETH below the June 10 low of $1648 would mean that the current decline is not corrective and the trend remains bearish. In this case, the price may drop to $1450.
