After a tumultuous drop followed by an encouraging rally, the ETH-USD has, yet again, found itself bleeding out and giving up all of its previously hard-fought gains. At the time of this writing, the market has failed to break through two macro trends: its descending supply and demand channel and its historic overhead resistance.
Figure 1: ETH-USD, Daily Candles, Macro Descending Supply/Demand Channel
The figure above shows a macro descending channel that has governed much of the market for approximately the last year. This type of channel, known as a “supply and demand channel,” is a tool used by some market analysts to determine roughly overbought and oversold conditions in the market. The top of the channel represents an overbought condition, and the bottom of the channel represents an oversold condition. A decisive break of the channel would represent potential trend-changing behavior and could even signal that a potential reversal is inbound. However, after showing an overbought signal for several days, the ether market took a sharp turn downard that now has us testing deeper support.
Figure 2: ETH-USD, Daily Candles, Horizontal Support Turned Resistance
In addition to the overbought signal from the descending channel, the market also appears to have turned support into resistance (illustrated by the thick blue line above). We can count this type of behavior as another check in the bear column, as this shows an unwillingness in the market to explore higher highs. And, to further illustrate the significance of this level, when we look at the weekly level, we can see a clear respect and unwillingness of the market to break the weekly close, as shown below:
Figure 3: ETH-USD, Weekly Candles, Weekly Close Now Resistance
For now, the ETH-USD market doesn’t exactly seem the most appetizing, as every single rally over the last few months has been easily stifled by bearish pressure. Due to the overwhelming evidence and lack of overall bearish pressure, I’m inclined to argue that the most logical destination for the current move is a retest of the support in the upper $80 range. We will have a lot more information if we see how the market reacts at this level. If, for whatever reason, we break this support in the $80s, we can expect a deeper test of lower lows and will likely find support in the upper $30s to lower $40s. The weekly chart shown in Figure 3 outlines major support and resistance areas that are likely to either see strong bearish or bullish respect.
However, if we can manage to gather up enough demand in the ETH-USD market, we will likely see a retest of the $160s before any significant selling pressure comes to fruition. From there, if we manage to break through the overhanging resistance, the bulls will still be put to task as there is a strong band of overhead resistance lying just above the thick blue line shown in Figure 3.
Overall, things are looking fairly bearish for the ETH-USD market. We are kind of stuck in the middle of support and resistance on a macro level, so it wouldn’t be entirely surprising to see a couple more weeks of choppy, unproductive market behavior.
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