The month of November promises to be difficult for the eternal second. Indeed, since Monday, ether is down 30%, until yesterday. After the Fed’s CPI report, this crypto rallied 12%. However, yesterday’s recovery is not enough to erase all of ETH’s losses in value this week. What if all these bearish moves made sense? Discover this technical analysis which will attempt to dissect these variations on Ethereum.
Technical analysis: Ethereum (ETH) has always been bearish?
Indeed, on a broad enough view, Ether is still bearish. It starts with the formation of a shoulder-head-shoulder (ETE) pattern between July and September. This is a chart pattern that will potentially drive Ethereum towards $1000. The right shoulder (QM1 in the figure) was formed following several movements:
- The breakout of short-term resistance (1st breakout).
- Followed by a range movement (rectangle in blue).
- Then, a false breakout to the top ensues (red rectangle). Which drove the Ethereum price to the QM1 level at $1760.
- Subsequently, an explosive downward move takes the price back towards the support zone at $1250 (vertical green rectangle). With this decline, Ether crosses a major support at $1400 (2nd breakout). This level is also the “neck-line” of the ETE pattern.
After that, the price of this crypto replicates the exact same scenario. The range move lasted slightly longer. The false break then took the price back to the QM 2 level. However, a bearish setup is added this time around. This is the RSI Convergence (purple line). That is, the RSI makes higher and higher highs, and the price, lower and lower highs. So, this all seems like the logical, purely technical reason that caused Ethereum to drop this week.
A slight increase soon?
Technical analysis may also provide an explanation for Ethereum’s rise yesterday. To do this, you will have to use the Fibonacci retracement tool. Putting the two ends of the tool at $878 and $2020, we understand that the price came up against the 0.786 level yesterday. This caused the bulls to react, driving the price back to the $1250 area.
If we assume that Ethereum follows the same previous scenarios, we can envisage a slight increase soon. But before that, a range move will probably take place next week. This will then be followed by a slight rise leading the price towards $1400 (QM 3).
This upward movement seems slight compared to the long-term view. However, this is still a potential gain of 14%. Once on the QM 3, the price could start lower towards $1000 again.
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