Ethereum continued its gaining spree during October, extending gains up to nearly 60% since the start of the month. However, a correctional phase was in effect as Bitcoin’s snapped a 12-day low at $58,000. For ETH, onus now fell to near-term support levels of $4K and $3,650. Should bulls falter at these levels, ETH could further weaken to $3,500-$3,100 before mustering strength for a new ATH.
Ethereum Daily Chart
Source: ETH/USD, TradingView
Ethereum’s closest defensive option was available at $4K and $3,700 but the Visible Range Profile suggested that these regions were yet to establish as reliable support zone. Should bears capitalize on these cracks, the lack of demand above $3,500 would see ETH decline by a further 10% before moving to a stronger support area.
Meanwhile, plenty of defensive resources were available below $3,650. A support line of $3,350 has already aided ETH during a mini-correction in mid-October.
To forego a bullish-thesis, bears would need to target a close below the mid-line of its horizontal channel and the 200-SMA (green). From there, a potential decline all the way up to $2,700 would become a serious threat.
Reasoning
According to ETH’s daily RSI, its present correction was long overdue. Lower peaks along the RSI identified a bit of a bearish divergence with respect to ETH’s price action – signaling a possible decline. In fact, ETH was in line for further losses as the MACD and Directional Movement Index also approached bearish crossovers. However, expect these indicators to maintain above each of their respective half-lines as ETH was very much within a bullish bias.
Conclusion
In case ETH gives up ground on $4,000 and $3,700, expect bulls to maintain the price within a strong support zone of $3,500-$3,100. The introduction of new longs would see ETH mount another attack at $4,400 and target a new ATH.
