Ethereum Likely to Continue Lower

Alan Penny

21 November 2019

3 min read

Ethereum trading

  • Ethereum drifting lower last couple of sessions
  • Psychologically important $150 below
  • Moving averages offer dynamic resistance

Ethereum, once one of the darlings of the cryptocurrency world, seems to be surrounded by the same kind of malaise that Bitcoin is. In fact, the last couple of months have not been good for cryptocurrency, as from July there has been a sizable drop in most major digital coins.

As a result, Ethereum has dropped from $300 down to $160 in the same amount of time, giving up 50% of its value.

Technical analysis

ETH/USD daily chart

The technical analysis for the pair is rather dour, but there are some signs of hope at the psychologically important $150 level. Recently, the market bounced from there but continued to see an overall souring of demand for digital coins.

buying Ethereum is going to be more of a longer-term proposition than anything else

Currently, the 50-day EMA is offering dynamic resistance, just as the 200-day EMA is. Both are spread out from each other, but they are only slightly negative at this point, suggesting that perhaps there is hope after all.

The $150 level should offer some buying, but it should also be noted that if the market does break down below there, it’s very likely to go towards the $100 level next.

A bounce from the $150 level could start to confirm the suspicion of a basing pattern. At this point, there may be a certain amount of people out there willing to “have a go” at Ethereum around that level.

To the upside, the 50-day EMA is currently trading at the $183 level and will be the first barrier for buyers to overcome. After that, the 200-day EMA trading at $197 will offer even more resistance.

If the market was to turn around a breakthrough, it could change the overall attitude of Ethereum, but it will obviously need some type of catalyst. Right now, buying Ethereum is going to be more of a longer-term proposition than anything else.

Trader or investor?

At this stage, it comes down to whether you are choosing to be a trader or investor. If you are an investor, then building a position around the $150 level might make sense. After all, even just a round-trip to where the market started to fall in summer would mean doubling your position size.

However, if you are a trader, then you need to look at this as a market that is currently consolidating and has not proven itself to be significantly supported to simply buy-and-hold.

Because of this, trading back and forth between the $150 level in the $197 level would make more sense. As things stand right now, it looks like we are going to be visiting $150 much quicker than we will $197. Therefore, the short-term prognosis remains bearish in a market that has no reason to go higher in the immediate future.

Granted, cryptocurrency has a reputation for being extremely volatile and can jump 10% out of the blue, but those days are starting to go by the wayside as markets mature.

Written By
Alan Penny

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