Ethereum’s native token, Ether (ETH), crashed on July 26, reducing hopes of a prolonged price recovery. The ETH/USD pair fell by about 5%, followed by a modest bounce back above $1,550.
Ethereum is rejected at $1,650
These overnight moves liquidated more than $80 million worth of Ether positions in the last 24 hours, CoinGlass data reveals.
The swing action also revealed an underlying bias conflict among traders who have been caught between two wildly opposing market fundamentals.
The first is the euphoria surrounding Ethereum’s possible transition to proof-of-stake in September, which has helped the price of Ether recover 45% so far this month.
However, this bullish euphoria is at odds with macroeconomic headwinds, namely the aggressive stance of the Federal Reserve and the European Central Bank, which put pressure on risk assets and saw the price of Ether plummet 68% YTD from its all-time high of $4,950.
Nevertheless, the short term could provide some upside for the price of ETH. For example, analyst PostyXBT anticipates that Ether will experience an interim bullish pullback based on the token’s recent swings within an ascending channel patternas it’s shown in the following.
In other words, ETH price could reach $1,700 before the close of July if the pattern plays out.
bearish divergence
However, looking at the same recovery trend in conjunction with Ether’s four-hour Relative Strength Index (RSI), an indicator of swing momentum, shows extreme disparities.
Curiously, Ether price has been making higher highs since Jul 18, while its RSI has been making lower highs simultaneously.
That shows a bearish divergence between ETH price and momentum, which means that the bulls have been losing their grip on the market, and a downtrend may follow.
Ether is also at risk of breaking below the lower trendline of its ascending channel, which coincides with two other price supports: the 50-4H Exponential Moving Average (50-4H EMA; the red wave) around USD 1,500 and the Fib 0.5 line near $1,475.
Loss of these key supports would likely push below $1,350 (the $0.382 Fiber line and the 200-4H EMA blue wave) in August, which would be a 10-15% decline from at the current price, in case this bearish scenario is fulfilled.
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