In a previous article, it was pointed out that Ethereum is struggling to break out of the $3300 area. There seemed to be no buyers in sight and the price setters were overwhelmed as the price dropped below $ 3287 and almost retested the resistance. The movement of Ethereum on the chart will depend on Bitcoin and Bitcoin is not strong on the chart either. It wouldn’t be surprising if Ethereum suffered an additional 20% loss from trading at press time.
Source: ETH/USDT on TradingView
Cryptocurrencies have tumbled in value after global equities took a hit and major indexes like the Nasdaq Composite got off to a bad start in 2022. This shows that cryptocurrencies are not as decoupled from traditional markets as they are. people hope and crypto remains a risk-on asset that investors flee during times of uncertainty.
On the charts, Ethereum has lost about 25% since it retested the $3280 area a few days ago. Furthermore, the weekend has arrived, and the weekends are usually lower in number than weekdays. This means that a volatile move in either direction cannot be ruled out.
For Ethereum, the 70.7% retracement at $2632 has turned resistance and next on the bears agenda is $2382. Lower in the chart, Ethereum can expect $ 2382 and $2049 act as supports in the coming days.
Theoretical basis
Source: ETH/USDT on TradingView
While the hourly RSI appears to be forming a higher low, even if the price does form a lower low (bullish divergence), this is simply not enough evidence of a change in momentum. Instead, this means there could be some sideways trading for Ethereum in the $2470 area. The RSI is likely to rise during this period, before dropping lower once again.
OBV shows a lot of selling in recent days.
Inference
Weekend volatility cannot be ruled out. However, at the time of writing, momentum is plummeting on the lower timeframes. The $2382 and $2049 levels can be watched for a bounce.