ETHUSD Lower, Next Stochastic Move Crucial

ETHUSD (Ethereum) is down today after touching a local high of 1,679 on January 21st. Cryptocurrencies started the year on a very positive note and ETHUSD is currently about 30% higher on the year. However, this bullish move seems to be losing the support of the momentum indicators, especially at a moment when the 50- and 100-day simple moving averages (SMAs) convergence sets the scene for an immediate move.

The RSI is dipping aggressively towards the 50 mid-point and the stochastic oscillator has broken below its moving average. It remains at the overbought territory (OB) and therefore still reveals a bullish bias, but its direction raises concerns. A possible move below OB could signal a possible reversal of the current trend.

If the bears succeed in pushing the market lower, the initial resistance could come at the 23.6% Fibonacci retracement level of the April 4, 2022 – June 18, 2022 trend low of 1,510, just ahead of the 200-day SMA at 1,428. Even lower, the 1,338-1345 area inhabited by the 50- and 100-day SMA could trouble the bears.

On the other hand, if the current dip proves to be a local trough, the bulls could target the recent high of 1,679. Higher, the September 11 high of 1,790 and the 38.2% Fibonacci retracement at 1,907 could prove stronger resistance points. Successfully breaking these levels, the way will be clear for bulls to test the area of ​​2,000 years.

In short, the rally seems to have lost support from technical indicators, but a decisive move lower is needed for bears to pull off a near-term victory.