Ethereum (ETH-USD) has shown a lot of endurance, stabilizing around $1,638 on Monday after fluctuating throughout last week. The cryptocurrency has found support at its 200-day Exponential Moving Average (EMA), an important technical indicator. Regardless, the precious metal continues to encounter selling pressure just below the $1,700 level. Market uncertainty is high, as the recent round of liquidations illustrates. Traders are now intently looking at ETH’s price action, looking for signs of a continuation to its recovery or an extension of Ethereum’s recent decline.
Technical factors combined with market sentiment are both playing a role in Ethereum’s price movements. The bulls have a huge hurdle at the $1,700 area. On the downside, $1,449 would be key support here, which needs to hold strong to prevent steeper declines. The Relative Strength Index (RSI) is an incredibly effective momentum indicator. It is an integral part of determining how strong expected price movements could be.
Ethereum's Current Price Action
Ethereum’s price remains under just over $1,638. This is quite the drop after testing its daily support at $1,449 just last week. Despite a minor rally of its own, the cryptocurrency has found it difficult to pierce above the resistance near $1,700. As of this writing on Monday, Ethereum is hovering around $84,000. This stabilization happens in the face of deepening market volatility, with traders watching critical technical levels for direction.
The daily chart’s RSI is 42, which is a bounce from being technically oversold with a print below 30 last week. Taken together, selling pressure could be abating. The RSI needs to climb above the neutral level of 50 for confirming that bullish momentum is indeed sustained. A flattening RSI near the neutral zone suggests that traders aren’t sure which direction to take, which reflects the current struggle between bears and bulls.
Ethereum’s price is walking a tightrope. Indeed, a successful close above $1,700 would clear the way for a rally toward the next daily resistance at $1,861. Should bulls fail to overcome this resistance then bulls may be faced with a retest of the $1,449 support region. A close below this support may lead to a sharper drop down to the key psychological round number support area at $1,300.
Market Uncertainty and Liquidation
Due to broader cryptocurrency market uncertainty, price swings and liquidations are creating or at least contributing to double-digit percentage price swings. Just recently, total liquidations across crypto markets climbed to a shocking $2.18 billion — a reminder of the highly risky environment. Liquidations often occur when highly leveraged traders are caught on the wrong side of a price move. This can lead to situations where they’re forced to sell their positions.
Market jitters are largely from the upcoming unlock of TRUMP tokens. This unlock represents additional tokens worth more than $330 million, bringing the total unlocked value to well over $906 million. This is because token unlocks usually produce heavy immediate selling pressure. Recipients will sometimes choose to sell their airdropped tokens, which may put downward pressure on prices. Ethereum investors and crypto investors in general are waiting to see what kind of impact these unlocks would have on Ethereum and other cryptocurrencies.
The market’s tendency to overreact to news, tweets and macro events are exacerbated by the existence of leveraged trading and trading bots that function in an algorithmic market. All of these factors could intensify upward pressures on prices, creating conditions for sudden and steep corrections. As always, traders should be cautious and trade the current environment while being mindful of their risk exposure.
Key Technical Levels and Indicators
The $1,700 area is a key resistance level that bulls must push through to confirm a new longer-term bullish trend. This level has been a strong resistance level over the past few weeks, stopping Ethereum from making any major moves.
On the negative side, the $1,449 price point is now an important support level that must hold in order to avoid deeper losses. A decisive break beneath this support may be an indication that the downtrend will continue. This can send the bullion to retest the psychological level at $1,300. The 200-day EMA, which served as support last week, is a key level to pay attention to.
As one of the most popular tools in technical analysis, the RSI is a great tool for determining momentum. The RSI would need to remain above 50 to suggest a longer-lived recovery rally could be in place. This level indicates that demand is outpacing supply. If the RSI does not manage to hold above 50, it may be a warning of weakening bullish momentum and an impending reversal.
