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ethereum ethusd
Nexo Logo

Ethereum Slides 14% In 24 Hours, Bear Div Hints At Deeper Drop Ahead

Tony Spilotro by Tony Spilotro
2 years ago
in Cryptocurrency news, Ethereum, Technical analysis
Reading Time: 2 mins read
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Few cryptocurrencies have had as explosive growth in 2020 as Ethereum has. The top-ranked altcoin led the market into a recovery in early 2020, and after a revisit to an accumulation range, the DeFi trend helped Etheruem rocket out of lows.

However, today was the first sign that Ethereum’s momentum may be waning, as the second-largest crypto by market cap tanked by over 14% in the last 24 hours. Losses have since cooled off to just roughly 7%, but a bearish divergence forming may indicate that there’s more downside ahead.

Ethereum Drops 14%: Bulls Hang Onto Half Of Gains, But Are At Risk Of Losing It All

Overnight last night and into the morning before today’s regular market opening, the always-on crypto market began to correct. Leading the selloff was Bitcoin and Ethereum, each dropping in a violent move.

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Ethereum specifically dropped over 14% from yesterday’s high to today’s low. After setting a new 2020 high yesterday at $490, today’s fall left a wick behind down to $420 per ETH token on some exchanges.

The top altcoin is trading back at roughly $440 at the time of this writing, but a massive daily bearish divergence has formed on the Relative Strength Index, which suggests the correction has only just started.

ethereum ethusd td9

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ETHUSD Daily Relative Strength Index Bearish Divergence | Source: TradingView

Top Altcoin Could See Much Deeper Correction, According To Overheated Technical Indicators

According to the Relative Strength Index on daily ETHUSD charts, Ethereum may have a lot more to fall. Ethereum has made a much higher high against the dollar, but the indicator continues to make lower highs. This behavior is called a bearish divergence, and it often forms ahead of a reversal.

Divergences are among the most reliable reversal signals, but they don’t tell you when these reversals will happen. As was seen yesterday, a new high was set before any bearish pressure took over.

But once bears took control, things quickly got out of hand and the correction became violent.

In addition to the divergence on daily timeframes, ETHUSD also triggered a weekly TD 9 sell setup on the TD Sequential indicator with Sunday night’s new weekly open.

ethereum ethusd td9

ETHUSD Weekly TD Sequential and Support Levels | Source: TradingView

The chart above shows just how reliable each of these 9 signals has been in the past, calling most of Etheruem’s most pivotal top formations. Coinciding with a bearish divergence makes the signal even more damning for the smart contract focused cryptocurrency.

If the fall does keep going, Ethereum still has support to test at $390 before risking a retest of past highs as resistance turned support. Below $390, targets could reach as low as $300, $275, and $210 approximately.

Tags: altcoincryptoethbtcethereumethusdETHUSDT
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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