Ethereum Plunges 10%, Bearish Signal Confirms With Close Below $390

Tony "The Bull" Severino

1 year ago

3 mins read

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Ethereum has been one of the best-performing assets in 2020, bar none. It beat Bitcoin, gold, stocks, and other assets in the best return on investment, had the $1,200 stimulus check be entirely invested in assets.

But after today’s 10% intraday drop, the top-ranked altcoin is at risk of closing the daily with a bearish engulfing candle. If the bearish candlestick formation confirms, a short-term downtrend may follow.

Ethereum Crashes 10% Intraday, Risk Of Bearish Engulfing If Daily Closes Below $390

Ethereum’s nearly 250% year-to-date rally may be finally ending, as the cryptocurrency plunged 10% today as part of a greater cryptocurrency market selloff. The crypto market is a sea of red, after Bitcoin, Ethereum, XRP, and most top altcoins took a tumble.

Because Ethereum rose among the most during the way up, it has fallen some of the hardest as well.

On daily timeframes, the drop against the dollar has resulted in a bearish engulfing candle possibly forming. A close below $390 would confirm the bearish reversal pattern.

ETHUSD Daily Bearish Engulfing | Source: TradingView

Japanese candlesticks, either by themselves or as part of a sequence, can provide traders with powerful signals. A bearish engulfing pattern occurs when a red candle close completely envelopes the previous green candle, and then some.

A bearish engulfing candle shows that bears have taken control of Ethereum. However, as severe as daily timeframes may appear, on ETHUSD weekly timeframes, this drop could be a retest of former resistance turned support. If so, things are a lot more bullish than they appear at a glance.

ETHUSD Falls To Weekly Support, Holding Is Critical For Uptrend Continuation

Although the top-ranked altcoin suffered as staggering drop today, the fall landed nearly perfectly at weekly resistance turned support. Often when assets breakthrough important resistance levels, a retest to confirm the support and resistance flip takes place.

Once the support is proven valid, the corresponding price action gives investors and traders confidence to start buying again, pushing prices higher.

ETHUSD Weekly Support and Resistance Flip | Source: TradingView

The support acted as such after Ethereum topped out in early 2018. The first major fall, took Ethereum to roughly $370. This is also the level where Ethereum peaked in 2019, before falling back down to the Black Thursday low.

The asset is back up over 326% from that low, so the current selloff could be normal profit-taking before the next major advance. Still, the 10% intraday selloff and possible bearish engulfing candle on the daily could provide the momentum to cause Ethereum to lose this critical support.

The next major support below is the February 2020 top at roughly $285 per ETH token, If Ethereum cannot hold there, a revisit deeper to roughly $225 is possible. If that can’t hold, the crypto market may be in for another bear trend.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
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Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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