After a tough week and strong selling pressure, ETH dropped $3,600 however a bullish trend appeared, a common signal of the end of a downward trend.
Key Support levels: $3,600, $3,300
Key Resistance levels: $3,740, 4,000
In the chart of ETH, excluding the flash crash of the 4th, the low was just lower. As of now, the price is hovering just above the $3,740 resistance level.
A large descending wedge (shown in blue) has also formed during the current price action. If ETH drops below the key support level, this bullish formation can quickly be invalidated.
Chart by TradingView
Technical Indicators
Trading Volume: One of the reasons the price made a lower low during the sell-off is the strong volume during the sell-off. It appears that today’s buying pressure is weak and that a break over the wedge (in blue) is unlikely.
RSI: In response, price bounced from $3,600 after the 4-hour RSI entered oversold territory (*30). The RSI fell below its daily low on a daily chart. The trend is bearish.
MACD: A bearish cross on the daily MACD did not bode well for bulls yesterday. One positive is that since November, when the correction began, the histogram has been making higher lows (bullish divergence). The downtrend may end by January if this continues.
Chart by TradingView
Bias Assessment
ETH has a bearish bias. As long as ETH does not make a higher high, the bias will remain bearish.
Short-Term Price Prediction for ETH
The current price action looks quite interesting because if the bullish wedge is confirmed, then ETH should rally sometimes in January, making this correction (from November to January) quite similar to the one we had in May-July 2021. This scenario can be invalidated as soon as the price closes a daily candle below the wedge.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
