Last week in Ethereum Price Analysis, we said:
Price indicators do not look good on any time frame. The 4H looks bearish, the daily looks neutral at best, and the weekly looks bearish. Investor sentiment shows room to decline, and fundamentals are in decline (at least in the short term). Macro economic environment does not look good for ETH either, as the Federal Reserve has taken an increasingly “hawkish” stance, signaling rising interest rates and further turbulence for speculative markets such as stocks and cryptos. It is likely we will see a big capitulation event at some point in the mid term, which will present a great buying opportunity for long term holders. In the long term (3+ years) ETH still looks very bullish, but the market will get worse before it gets better.
At the time of last week’s article, ETH was trading around $3k. Over the past 7 days, ETH has retraced in price and is currently trading around the $2800 level, lining up well with our bearish predictions.
Let’s take a look at the charts and see if we can predict ETH’s trend.
Ethereum Price Analysis
On the 4H chart, moving averages are all in a bearish configuration. The first resistance is the 50 SMA, currently at $2875, followed by the 100 SMA at $2950 and the 200 at $3100. These will all act as resistance levels.
ETH is currently bouncing upward on the 4H and may retest the 50 SMA. If it rejects, i expect ETH to continue retracing and find lower support. The closest support level is around $2700.
Looking at the RSI and Stochastic on the 4H timeframe, it looks unlikely that ETH will continue its upward break. The RSI is neutral and is nearing the same resistance level that it faced on previous pumps – failing to hold above the 50 range. This coincides with the stochastic looking overextended and ready to reverse.
On the daily chart, moving averages are neutral but we see bearish divergence as the price rejected off the 200 SMA. The 100 SMA is our closest resistance level at $2900, and the 200 SMA will also act as important resistance around $3400.
A potential hidden bullish divergence can be seen when looking at our momentum oscillators. The RSI is nearing a key oversold level and the stochastic has bottomed out – signaling a potential reversal in the near-term. If this were to happen, ETH would actually be printing a higher low, as previous bottoms were around $2k and $2.5k, respectively. A higher low would be bullish if it occurs.
ETH looks on the precipice of a cliff on the weekly chart. The RSI is declining and stochastic indicates more room to fall. A massive head and shoulders pattern seems to be forming on the chart. None of this is good news. The weekly 200 SMA should act as low support, currently at $1150.
Ethereum Investor Sentiment
The Ethereum FGI reads “Fear” which is not great news considering the downtrend. A reading of “Extreme Fear” would signal the bottom is almost in – but fear leaves room to go down.
Ethereum Fundamental Analysis
A lot of ETH was burned in the past week thanks to an NFT land sale. This was the most busy week ETH’s network has seen in a while – burning over 100% of net emissions. In fact, over $150M worth of ETH was burned thanks to that NFT land sale event. This is more of an anomaly in the current market, but network usage will pick back up once the market changes.
Conclusion
Though ETH was net deflationary over the past week, fundamentals remain poor as network usage is on a downtrend. The price does not look promising on any time frame, however there is potential for bullish divergence to solidify on the daily chart if a bounce occurs soon. This could be invalidated by a flash dump, however. The most likely scenario for ETH is to retrace to the $2700 level over the next week (local support).
Not investment advice. Do your own research.
