The Ethereum price snapped a 13-day winning streak yesterday. Does this signal an end to the rally, or merely a pause for breath before the next leg up?
After losing 3.8% yesterday, Ethereum is marginally higher this morning, and the last trade of $2,524 shows an increase of +0.60% on the day.
The Etherum price chart has been a sea for green for the last two weeks. After gaining an impressive 65% in 12 days, a pullback was inevitable. Similar to Bitcoin, ETH has retraced around 10% of the recent rally. However, unlike BTC, since the 20th of July, Ethereum has only suffered 1 losing day.
This is certainly encouraging for the bulls. But it leaves the bears wondering if the Ethereum price may soon reverse course.
A clear trading channel has formed between $1,650 and $3,000 following May’s crypto crash. And a visit to $1,690 on the 20th of July was the catalyst for the resulting rebound.
However, the rally is yet to test the top-end of this channel. This remains an obvious target for the bulls. Although, there are some indications this may prove not easy.
Firstly, despite the price rolling over, the Relative Strength Index reading of 64.40 is still very high. And although the indicator has reversed from Sunday’s overbought reading, it still leaves ETH vulnerable to consolidation or a reversal.
Additionally, Ethereum has reversed below the 100-Day moving average at $2,546. Although the price has hardly fallen away, the average could easily be recovered by the end of play today.
But, the 50 and 200-day averages are flashing an ominous warning.
The 50 DMA at $2,150 is now below the 200 at $2,167. This bearish crossover is known as a death cross. Technical analysts consider this an extremely bearish occurrence which indicates a reversal in bullish momentum.
Although, when considering the recent price action, I’m not convinced it signals impending doom.
As long as the price stays above $2,150, I consider the rally intact. Of course, this suggests a 15% downside from here. However, a healthy correction is a constructive phase of any rally.
That being said, if the Ethereum price closes below $2,150, it clouds the outlook. And on that basis, the bullish view becomes invalid for the time being.