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.