Is Ethereum (ETH) about to enter a significant downturn, potentially reaching the low $2,000 range, or are current price levels presenting a final opportunity for traders and investors to accumulate?
ETH Price Rejected from Downtrend Again
Analyzing the 12-hour timeframe for ETH reveals a consistent pattern of price decline since its peak near $5,000. A potential bottom may have been established around the 0.786 Fibonacci level, just above $2,700. However, the price has thus far been unable to decisively break through the established downtrend, with the most recent price drop originating from this trendline. Should the 0.786 Fibonacci level fail to hold as support, the next significant horizontal support lies at $2,500.
Is $2,830 Horizontal Support About to Break?
The daily timeframe indicates that the ETH price has been trading within a relatively sideways range since the start of 2024. Nevertheless, the emergence of a higher low and a subsequent break of the downtrend could pave the way for a recovery towards previous highs. The strong horizontal support level at $2,830 is currently under pressure and could be on the verge of breaking. A breach of this level might lead to a local lower low, pushing the price down towards the $2,500 horizontal support. The Relative Strength Index (RSI) at the bottom of the chart suggests that a breakout of the indicator's downtrend line could coincide with a similar upward movement in price action.
Safest Trade: Wait for Breakout Confirmation
For individuals with a more risk-averse approach, initiating a long position in ETH amidst prevailing negative market sentiment could feel counterintuitive. However, experienced traders often view such periods as opportune moments to buy. It is crucial to acknowledge the possibility of further price depreciation. The horizontal support at $2,500 represents a significant barrier, and below that, the support at $2,100 stands as the strongest. For those considering entry, employing stop losses close to these support levels would be prudent. The most secure trading strategy involves waiting for confirmation of a breakout from the descending trendline. Given the potential for a substantial upward move following such a breakout, particularly as the Stochastic RSI indicators appear to have reached oversold territory, foregoing a potentially lower entry point by waiting for confirmation could prove to be a worthwhile strategy.