After a blazing start to August, Ethereum seemed to have settled down on the charts. Its weekly gain now stood at a minor 1% as buyers slowly went away from the market. Since the hiatus came just before ETH tested an important price range of $3,450-3,600, there were a few ways its market could unfold before the next upcycle. At the time of writing, ETH traded at $3,192, down by 1.7% over the last 24 hours.
Ethereum 4-hour ChartÂ
Source: ETH/USD, TradingView
Bulls have done well to sustain prices above $3,000 but a bearish setup needed some negotiating. Post 7th August, higher highs were observed at $3,200, 3,270 and $3,330 while lower highs have followed at $2,890, 2,980 and $3,000. The trendlines plotted along these points indicated an ascending wedge pattern- a setup that exhibits greater chances of a breakdown.
The turning point of such a result could be around the $3,100 level, which also lay close to the last band of the EMA Ribbons. A close below $3,100 could trigger a 7% decline towards the lowest point in the pattern at $2,890. To negate such an outcome, ETH would need to close above $3,330, which would indicate a higher high and continuation within the pattern.
Reasoning
Multiple bearish divergences were spotted across ETH’s indicators. For instance, RSI moved within a down-channel and did not concur with recent highs formed by ETH bulls. A move below 40 would provide confirmation of a bearish turn. The Awesome Oscillator was in danger of extending below the half-line on the back of a bearish twin peak setup. Moreover, Directional Movement Index suggested that bears were on the cusp of control as the -DI inched towards the +DI.
Conclusion
Ethereum did not seem to have the legs to climb above $3,450-resistance just yet. Its market was indicative of an incoming retracement and short traders must be on the lookout for a close below $3,100. On the plus side, the projected pullback would be considered healthy over the longer run.
