In my previous post on ETH's price, I mentioned that it was gunning for the 21w SMA level at about $168. It reached my target and went further beyond to test the 200d SMA. ETH went as high as $176 as seen in the chart below.
Now we are seeing some weakness in the price and the death cross is also in the horizon. The death cross is basically a short-term SMA crossing over a longer term SMA. In this case, the orange 50d SMA has crossed the 200d SMA. Does this spell doom for ETH price and the calls off the 110% pump I was talking about? I will be cautious and not write the pump off so soon. Here is why.
Pattern still intact
Let's take a closer look on the previous pattern. In that previous pump, ETH first surged from the local bottom on $116 to $179. Then we see a 38.2% retracement, which is aligned with the fib retracement levels. It also held the 21d SMA.
Zooming into present chart, ETH pumped from a local low of $90 to $176 and is set to retrace by 38.2% respecting the fib retracement levels. At the same time, it is also within the 21d SMA range.
The 2 arrows in red that I drawn are my projection of how ETH might move in the coming days. Judging on the lack of volume, I think there is a good chance that it will retrace to the $143 level, hitting the trendline in green, 21d SMA and the 38.2% fib retracement level. The confluence of all these levels should serve as a strong support and allow ETH to bounce up from there. I will then assess how much ETH can bounce from there and whether the pattern is still intact.
The key resistances as I see, will be the 50d SMA and then the 200d SMA.
Death crosses aren't always bad
As bad as the name sound, death crosses do not always lead to a fall in price. It will be best if we refer to previous death crosses for the particular asset of interest. ETH had 2 prior 50d/200d death crosses that I can find on the Coinbase chart. Let's take a look at them.
As you can see, the 2 previous death crosses led to an almost immediate price pump. Will we see the same for this death cross? No one can be certain but historical data seems to point to this death cross being a good event for the price, at least for the very short term.
Conclusion
The price movement is still intact. Retracements usually happen after a strong move, be it down or up. Hence, what we are seeing now is normal. ETH beat my expectation and went above $168 before this retracement, so I am actually more bullish than previously.
I will be looking to add on to my position if ETH hits the $143 level and holds that level with strong volume. Again, all these are just my personal thought processes and analyses. It should not be used as financial advice and everyone should do their own due diligence and research when investing their own money.
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