The Ethereum (ETH) price recently hit a new yearly high of $2,403 on December 9 but has experienced a significant downturn since then, prompting questions about its future trajectory.
ETH’s price surge began in October, breaking out from a descending resistance trend line on November 5. After briefly encountering resistance, it reached a yearly high of $2,403 on December 9.
Overview:
- Current Downturn: The price has sharply decreased, reaching a low of $2,145 before a slight bounce. Analysts note that ETH’s relative weakness to Bitcoin hasn’t been seen since June 2022, raising concerns among traders.
- Technical Analysis: The Relative Strength Index (RSI), a momentum indicator, provides mixed signals. While it fell after a bearish divergence, it remains above 50, indicating a potential for a rebound.
Expert Insights:
- Mixed Daily Reading: The daily timeframe presents a mixed outlook, with the RSI offering conflicting signals. Bulls have an advantage if the RSI is above 50 and the trend is upward, but a reading below 50 suggests the opposite.
- Bullish Weekly Perspective: The weekly timeframe, however, remains decisively bullish. A breakout from the long-term $2,000 horizontal resistance area, in place since April 2022, signals a potential for a significant increase.
- Trader Perspective: Some attribute the recent decrease to overleveraged long positions being flushed out. Cryptocurrency trader Daan Crypto suggests that a reset in open interest could pave the way for a potential upward movement.
Price Predictions:
- Weekly RSI Supports Increase: The weekly RSI is above 50 and moving upwards, supporting the possibility of a continued increase. The next long-term resistance is projected at $3,500, requiring a 60% increase to reach it.
- Cautionary Note: Despite bullish predictions, analysts emphasize the importance of a weekly close above $2,000 to validate the breakout. A close below this level could lead to a 30% decrease, with the next support at $1,500.
Conclusion:
As Ethereum stands at a critical juncture, traders and analysts closely watch key support levels and the RSI for signals of a potential bounce back or a further breakdown. The cryptocurrency market remains dynamic, with ongoing developments shaping the trajectory of Ethereum’s price in the coming days and weeks.
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