Ethereum has been trending lower on its 1-hour time frame and is testing the descending trend line connecting the highs since last week. This lines up with the 61.8% Fibonacci retracement level at the $550 mark and a continuation of the drop could lead to a test of the swing low near $450.
This area lines up with a longer-term rising trend line highlighted previously, so a break below this could signal that a prolonged selloff is underway. The 100 SMA is below the longer-term 200 SMA on the 1-hour chart, which means that the path of least resistance is to the downside. In other words, the downtrend line is more likely to hold than to break.
In addition, the 100 SMA is close to the trend line to add to its strength as a ceiling. The gap between the moving averages is also widening to reflect stronger selling momentum.
Stochastic is heading south to show that bearish pressure is present. RSI hasn’t quite reached overbought areas but is also turning lower, which suggests that ETH/USD might follow suit.
The G20 Summit this week could determine where cryptocurrencies might be headed over the next few days as world leaders would likely share their thoughts on bitcoin and the like. Recall that IMF head Lagarde seems more focused on cracking down on criminal activity involving cryptocurrencies, but other world leaders could be open to developments.
If so, ethereum and its peers could see some upside on a relief rally. Recall that headlines haven’t been so positive for the industry over the past week, but it looks like the concerns are fading.
Apart from that, dollar price action could also take center stage with the FOMC decision lined up. An interest rate hike of 0.25% is widely expected, but there’s a strong chance that policymakers could temper this with cautious remarks. Further concerns about inflation could dampen dollar gains, which might be positive for ETH/USD.
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