Ethereum’s native token Ether (ETH) is showing signs of bottoming out as ETH price bounced off a key support zone. Notably, ETH price is now holding above the key 200-week simple moving average (SMA) support level near $1,196.
The 200-week SMA support looks purely psychological, in part due to its ability to serve as bottom levels in previous Bitcoin bear markets.
The independent market analyst “Bluntz” holds that the curved level would also serve as a strong price floor for Ether, where accumulation is likely.
Point out:
“BTC has bottomed out 4 times in the 200 week moving average dating back to 2014. [Es seguro asumir que es un nivel bastante fuerte. Seguro que podemos mecha por debajo, pero también [quedan] six days a week.”
ETH/USD is currently almost 75% below its all-time high, seven months after reaching around $4,950.
This massive correction has made the Ethereum token an “oversold” asset, with relative strength (RSI) readings below 30, another technical indicator showing that ETH is a “buy.”
The last time Ether became oversold was in November 2018, which preceded the end of a 12-month bearish cycle that saw ETH lose 94% of its value.
Unfortunately, the same bearish exhaustion cannot be promised in 2022 as Ether continues to face some serious macro headwinds.
ETH Bullish Technical Signals Not Enough
Ether’s attempt to find a concrete bottom comes against the backdrop of a selling frenzy that is taking place across cryptocurrency and traditional financial markets.
At the center of its 75% price correction is a dovish Fed with its prospect of raising interest rates by 175 basis points by the end of September, according to interest rate swaps linked to the dates of the results of FOMC policy.
In other words, riskier assets would be affected by rising borrowing costs. This could hurt Ether’s recovery prospects even though it remains above a supposed “strong” support level.
1-2 months as the Ethereum merge would be implemented between August and October. And traders will front-run it. It won’t matter much if the Fed gets more aggressive, but if it doesn’t, then that’s your catalyst.
— Alex Krüger (@krugermacro) June 2, 2022
1-2 months, since the Ethereum merger will take place between August and October. And the operators will get ahead of it. It won’t matter much if the Fed gets more aggressive, but if it doesn’t, then that’s your catalyst.
Ether Price Objectives
ETH price has been testing the 0.786 Fib line (near $1,057) as its interim support. This price level serves as a part of the Fibonacci retracement chart, drawn from the swing high of $1,323 to the swing low of $82, as shown in the chart below.
A 94% price drop similar to 2018 would risk taking ETH to the 0.236 Fib line near $375, down 70% from the current price.
Conversely, if Ether does indeed bottom out near its 200-week SMA, its path of least resistance appears to be towards $2,000. A prolonged upside pullback above $2,000 would see the Ethereum token touch $3,500 as its next upside target.
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