Ethereum: Talks of a bear market are premature, but here are the risks ahead
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
Ethereum has presented both bullish and bearish arguments so far in the month of September. At the start of the month, ETH rose by nearly 30% to a 16-wk high of $4,025 and set its sight on a new ATH. However, a wider sell-off on 7 September fueled an abrupt end to its rally and triggered an immediate 25% sell-off.
In fact, the market was still reeling from the aftereffects of this decline, at press time, as ETH was unable to progress above certain resistance levels. Moreover, the lower trendline had been breached and a downtrend seemed to be in play.
With some proponents calling for a bearish return to late-July levels, ETH looked to be under the pump to prove its cynics wrong. Luckily, expectations of a bear market might just be unreasonable at the moment since ETH has been trading above some important price levels. However, immediate recovery is still a long shot.
At the time of writing, ETH was valued at $3,077 after noting a bullish comeback over the last 24 hours.
Ethereum Daily Chart
Taking recent losses into account, ETH, at press time, was trading at a near 30% discount compared to its May record high. Considering the fact that ETH is yet to close below the important support level of $2,650 and its daily 200-SMA (green), calling for a bear market is indeed premature.
A resistance range of $3,660-$4,016 is all that separates ETH from registering a new ATH on the chart.
While this may look like a small mountain to climb, it is riddled with several near-term challenges. For instance, the visible range suggested that ETH attracted a lot of trades between $3,000-$3,500. This means that bulls would have to exert a fair amount of pressure in order to push ETH above $3,500.
The price is also yet to decisively close above the $3,000-mark. A bearish spinning top or a doji candle would mark a possible revisit to the 200-SMA. From the same, a breakdown can be threatened too. Finally, the upwards sloping trendline also ran bearish and is yet to be retested.
ETH’s indicators flashed bearish readings as well. The RSI, MACD, and Awesome Oscillator were on the precipice of extending below their half-lines – A development that discourages speculation from bullish traders. This also meant that sellers were in control of the market and any gains would only be momentary.
To overturn these readings, ETH needs to close above $3,500 backed by strong volumes. This would increase the chances of reclaiming $4k.
The ETH market played more favorably for sellers, rather than buyers. Traders must wait for ETH to close above $3,500 on healthy volumes before taking up any long positions.
Until then, ETH would be at the risk of some more drawdowns.