Ethereum Down Over -20%: Is The Correction Over Yet?
Key Takeaways:
- Ethereum ETF Uncertainty: The market is anticipating decisions on Ethereum ETFs with mixed opinions. While some experts predict imminent approval, others, like JP Morgan analysts, express skepticism, highlighting regulatory uncertainties.
- Technical Bearish Trend: ETH/USD shows a bearish trend in the technical analysis, with a significant correction from its yearly high and current trading below key moving averages, suggesting potential continued downward movement.
- Potential for Reversal: Despite the bearish outlook, oversold conditions indicated by the RSI and specific candlestick patterns like the Hammer suggest a possible short-term reversal or pullback in the ETH/USD pair.
Market Overview:
The cryptocurrency market is currently focused on Ethereum following the Bitcoin ETF decision. Despite positive expectations, Bitcoin's price has seen a significant decline. The market is now anticipating decisions regarding Ethereum ETFs, raising questions about their necessity and potential impact.
Ethereum ETF: Projections and Skepticism:
The approval of an ETH spot ETF seems imminent, according to Lucas Kiely of Yield App. He criticizes the SEC's previous handling of Bitcoin ETFs, suggesting a more streamlined process for Ethereum. However, JP Morgan analysts are cautious, doubting the SEC will classify ether as a commodity soon. Coinpedia also notes the SEC's delay in deciding on Fidelity's Ethereum Spot ETF, emphasizing the uncertain landscape.
Ethereum ETF: An Opportunity or a Threat?:
The ETH ETF is viewed by some as an opportunity for broader market integration. Bitcoin's ETF approval, despite initial setbacks, is seen as paving the way for other cryptocurrencies. However, the recent negative trend following the Bitcoin ETF approval has led to mixed feelings about Ethereum's ETF prospects.
Technical Market Outlook:
ETH/USD reached a yearly high of $2,715 before a sharp decline, marking a -21.20% correction. The key demand zone is at $2,132 - $2,102, and the market is currently near this area. The momentum on the H4 chart is weak and negative, suggesting a potential pullback with a limited upside towards $2,300.
Trend Analysis: The H4 chart shows a bearish trend, with the price below the 100-period EMA and the 50-period DEMA. A descending trendline further confirms bearish momentum.
Candlestick Patterns: Bearish Engulfing patterns indicate strong selling pressure. The presence of a Hammer pattern may suggest a potential reversal, but it requires confirmation.
Indicators: The RSI at 17.42 is in the oversold territory, suggesting a potential for reversal or retracement.
Intraday 1H Indicator Signals:
- Buy Signals: 15 out of 23 technical indicators.
- Sell Signals: 3 indicators.
- Neutral: 3 indicators.
- Moving Averages: 9 indicate Sell, 9 indicate Buy.
Sentiment Scoreboard: The sentiment is very bullish (80% bulls vs. 20% bears), with an increase in bullish sentiment over the last week (68% bulls vs. 32% bears) and the past three days (65% bulls vs. 35% bears).
Weekly Pivot Points:
- WR3 - $2,556
- WR2 - $2,488
- WR1 - $2,449
- Weekly Pivot - $2,421
- WS1 - $2,382
- WS2 - $2,353
- WS3 - $2,286
Trading Insights for ETH/USD Market:
Bullish Scenario:
- The oversold RSI may signal a bullish reversal.
- A Hammer pattern or bullish reversal at the support level could indicate an upward movement.
- Recovery above $2,100 support might attract bullish traders, targeting a retest of moving averages.
- A short squeeze could rapidly increase prices due to oversold conditions.
Bearish Scenario:
- The EMA and DEMA may act as dynamic resistance, maintaining the downtrend.
- Bearish Engulfing patterns suggest continued selling pressure.
- Breaking below $2,100 support could lead to new lower lows.
- Negative market sentiment and macroeconomic factors could exacerbate the bearish trend.
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Important Notice
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.
