Ethereum [ETH] Price Analysis: Will The Bearish Divergence Precede A Drop In Price?

The price of ETH/USD touched $168 on February 24th, before generating bearish divergence in the RSI and the MACD and breaking down sharply. The rebound attempts were unsuccessful, and it has struggled to break out above $140 since corresponding with the 0.5 fib line of the entire drop. Since then, it has been trading inside a horizontal channel. It has made several unsuccessful attempts at breaking out above $140 while it has generated significant bearish divergence in the RSI and the MACD. The price of ETH seems to be mirroring that of BTC.

Key Highlights:

  • There is major resistance near $140, corresponding with the 0.5 fib line of the entire drop.
  • There is a minor support area near $125
  • The price is trading inside a horizontal channel
  • There is a medium and short-term bearish divergence in the MACD and the RSI
  • The price is following a short-term ascending support line

Ethereum Price Analysis – ETH/USD – 2 Hours Chart

Ethereum Price Analysis
Chart Source: Tradingview, Kraken

A look at the 2-hour chart shows us that after touching $168, the price dropped sharply, creating a massive bearish engulfing candle.  The drop was preceded by bearish divergence in both the RSI and the MACD.  Price initially tried to rebound, but that proved ultimately unsuccessful, not being able to get past the 0.5 fib line. It has been trading in these areas for 12 days.

Also Read: Bitcoin [BTC] Price Analysis: Will BTC Break out of the $4000 resistance?

As for the indicators, the price is trading above the 50-period MA but below the 21-period one, which is ready to make a bearish cross. There is significant bearish divergence developing in the MACD, which has made a bearish cross and is dropping, almost being in negative territory. Similarly, the RSI was at overbought levels for a short period, before developing bearish divergence and dropping.

Ethereum Price Analysis – ETH/USD – 30-Minutes Chart

Ethereum Price Analysis
Chart Source: Tradingview, Kraken

A look at the 30-minutes chart shows that after the drop, price bottomed at $124 and created a support area in that level. It has made several unsuccessful attempts at breaking out above $140. It is possibly following an ascending support line, touching it for the third time.

As for the indicators, the RSI was at 88 for a period of time, indicating overbought conditions. However, while the price has made higher highs, the RSI has made lower highs, creating significant bearish divergence. The same has occurred in the MACD, which has made a bearish cross and dropped inside the negative territory.

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