Ethereum (ETH), the second largest cryptocurrency by market cap, has recently seen its price drop below the 4-hour Simple Moving Average (SMA). This technical development is notable for traders and investors as the 4-hour SMA is often used to measure short-term market momentum.
When the price of a cryptocurrency falls below this moving average, it can signal a potential shift in market sentiment from bullish to bullish bearish. This could imply increased selling pressure and a possible continuation of the downtrend. The implications of this price movement extend beyond technical analysis, as broader market conditions, investor behavior and fundamental factors also play a crucial role in shaping Ethereum’s future trajectory.
In this article, we will examine ETH’s potential price action using technical indicators.
Ethereum price condition on the 4-hour chart
Firstly, it can be noted that the price of ETH has undergone a decline below the 100-day SMA in the 4-hour time frame after having been moving in a consolidating manner for a while. It should be noted that when an asset falls below its SMA, this can be an indication in most cases a short or long term move in that direction.
Moreover, the Relative Strength Index (RSI) indicator also confirms that Ethereum could move in a downward direction for a while as the RSI line has crossed below 50% and could continue to trend there for a while.
The daily chart shows that Ethereum is trying to make a move towards the 100-day SMA after dropping a bearish candlestick the previous day. At this point it can be suggested that ETH has fallen to test the 100-day SMA before making another upward move.
Finally, the RSI indicator line is currently falling out of the overbought zone towards 50%, indicating that there is still room for ETH to move lower.
ETH price projection
As of now, Ethereum is trying to move down towards the daily SMA. If it falls below that, it will continue falling towards the USD 2,865 support level. Moreover, it may fall further to test the USD 2,147 support level if it falls below the above-mentioned level.
However, if the price of ETH hits the SMA and rebounds, it will move upward towards the $4,099 resistance level. Should the price fall below this resistance level, the price will continue to rise to test the $4,863 level. ETH could move to create a new high if it breaks above the $4,863 level.
At the time of writing, ETH’s price was trading around $3,694 and up 0.41% with a market cap of over $443 billion and a 24-hour trading volume of over $18 billion. The market capitalization has fallen by 2.97%, while trading volume has increased by 39.28% over the past day.
Featured image from iStock, chart from Tradingview.com