ETH Crashes 10% Overnight But is the Correction Over?

Key Support levels: $4,175; $3,850 

Key Resistance levels: $4,350; $5,075

ETH already gave us plenty of warning signs that a market downturn would occur.

As we flagged before, the price broke below the ascending wedge (which was a bearish formation), and the MACD did a bearish cross on the daily timeframe. Today, these signals materialized with a 10% price drop, pushing ETH below the key level at $4,400.

It’s important to see how today’s candle will close before further analysis. Until then, ETH has good support at $3,850. As long as that level holds, the cryptocurrency remains bullish in the long term.

The Technicals

Trading Volume: Volume increased on this drop, and this is bearish. Unless bears are satisfied with the current price, ETH could continue to fall lower towards the key support, albeit in a less dramatic fashion compared to today.

RSI: The RSI took a nosedive as with all indicators, and it is currently located under 30 points on the 4-hour timeframe. This signals that the bulk of the correction has already happened, and a bounce could take place in the future.

MACD: The MACD on the daily timeframe gave an early warning a few days back that ETH was turning bearish, which was confirmed when its moving averages did a bearish cross. This only intensified as time passed, and today we had the largest drop in price since September. MACD remains bearish on all timeframes at the time of this post.

Bias

The short-term bias for ETH is bearish, and there seems to be a high chance ETH will retest the key support level of $3,850. If that level holds, then ETH can return on the uptrend and flip the bias back to bullish. For now, the long-term market structure of ETH remains positive. Only a break of the current key support could change that.

Short-Term Price Prediction for ETH

Ethereum’s loss of momentum in the past few days was confirmed with this drop, and the price fell by a significant margin. In the near term, it’s expected to see the price stabilize around the low $4,000 before the market decides on the next steps. A price closure below the key resistance at $3,847 would put bulls in a lot of trouble, but this appears unlikely at this time. We will revisit the chart as the price action develops.