Technical Analysis – ETHUSD lower, next stochastic move crucial

ETHUSD (Ethereum) is edging lower today after touching a local peak of 1,679 on January 21. Cryptocurrencies started the year on a very positive note and ETHUSD is currently around 30% higher year-to-date. However, this bullish move seems to lose the support from the momentum indicators, especially at a moment when the 50- and 100-day simple moving averages (SMAs) convergence is setting the scene for an imminent move.

The RSI is dipping aggressively towards the 50-midpoint and the stochastic oscillator has broken below its moving average. It remains at the overbought territory (OB) and hence still revealing a bullish bias, but its direction is raising concerns. A potential move below OB could signal a potential reversal of the current trend.

Should the bears manage to push the market lower, the initial resistance could come at the 23.6% Fibonacci retracement level of the April 4, 2022 – June 18, 2022 downtrend of 1,510, just ahead of the 200-day SMA at 1,428. Even lower, the 1,338-1345 area populated by the 50- and 100-day SMA could trouble the bears.

On the other hand, if the current dip proved to be a local trough, the bulls could aim for the recent high of 1,679. Higher, the September 11 high of 1,790 and the 38.2% Fibonacci retracement at 1,907 could prove stronger resistance points. Upon successfully breaking these levels, the path will be clear for bulls to test the 2,000s area.

To sum up, the rally appears to have lost support from technical indicators, but a decisive move lower is needed for bears to clear a short-term victory.

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