Ethereum (ETH) price has shown signs of a potential downturn as it reached an exhaustion of bullish momentum, signaling a possible drop in the near future. According to analysts, ETH has produced a clear sell signal, indicating a shift in the cryptocurrency’s trend.
The world’s second-largest cryptocurrency by market capitalization has been on a bullish run for the past few weeks, with its price surging by more than 34% in just a matter of days, according CoinMarketCap data.
The digital asset has been benefiting from a strong market sentiment, as well as the growing interest in decentralized finance (DeFi) and non-fungible tokens (NFTs). However, experts are suggesting that this could be an opportunity for long-term investors to accumulate and take advantage of the potential dip.
Ethereum Price To Face Immediate Resistance
Like Bitcoin, Ethereum has been experiencing a bullish trend and traded above $1,800 earlier today, although it has since fallen to $1,759 at the time of writing.
Other cryptocurrencies such as Litecoin (LTC), Dogecoin (DOGE), Solana (SOL), and Ripple (XRP) have also seen significant gains.
ETH trying to breach multi-year resistance. Chart: TradingView
TradingView data shows the ETH/USD pair is positively biased, its upward momentum is not as strong as Bitcoin’s. Ethereum is currently struggling to break through the $1,800 level and may face resistance at $1,900 if it does.
Despite Ethereum’s price reaching higher highs since March 14, the Relative Strength Index (RSI) and Awesome Oscillator have produced lower highs, indicating a divergence. Divergence can lead to declining momentum and a potential reversal in price.
In the context of cryptocurrency prices, divergence refers to a situation where the price of a particular cryptocurrency moves in a different direction than that of a related asset or benchmark.
ETH total market cap now at $214 billion on the daily chart at TradingView.com
For example, if the price of Bitcoin is rising, but the price of Ethereum is falling, this could be considered a divergence between the two cryptocurrencies.
This phenomenon can occur due to a variety of factors, such as differences in market sentiment, news events, or technical factors affecting each cryptocurrency.
Traders and investors may use divergence as a signal to adjust their trading strategies, as it can indicate a shift in market dynamics or potential opportunities for profit.
Bullish Thesis At Stake
Although Ethereum’s price has been on an upward trend, it is possible that it may experience a 10% drop and fall to either the psychological level of $1,600 or the monthly level of $1,677. This potential drop should be approached with caution, as it could signal a shift in market sentiment.
Specifically, if the price drops below the $1,600 level and continues to experience selling pressure, it could lead to the $1,422 level becoming a resistance level and invalidate the optimistic outlook for Ethereum.
-Featured image from EthereumPrice