Ethereum at 12 Month Fresh Lows; How Far Can This Market Drop?

The troubles continue for Ethereum over the past 24 hours as the cryptocurrency drops a further 3.89%. Ethereum is currently exchanging hands at a price of $192 after the cryptocurrency suffers a dramatic 33% price drop over the past 7 trading days.

The decentralised operating system, designed for developers to create dapps (decentralised apps) upon has struggled to maintain any form of support over the past few months.

Speculators are beginning to worry about how long this price drop could continue for as there seems to be no end in sight.

To add further to these worries, Vitalik Buterin, teh founder and creator of Ethereum, has recently been quoted saying that the cryptocurrency space will no longer see 1000x growth ever Asians. He assumes that enough people know about cryptocurrency technology so we will never see that form of rapid growth every again. We must not interpret this as him saying there is no space for growth as there is still plenty room, however, these recent comments have caused speculators confidence to fall lower as price action reflects the sentiment within the market.

The market is so low that, if it does continue even lower, miners will need to switch off of their mining rigs as the cost of electricity will outweigh the cost of each Ethereum mined causing it to become unprofitable.

Despite these worrying times, Ethereum still holds the second ranked place in the industry in terms of overall market cap value. Ethereum currently has a total market cap value of $19.60 billion after the 37 month old coin suffers a 41% price drop over the past 30 trading days. To put the price drop into perspective, Ethereum is a total of 86% down from it’s all time high price.

Let us continue to analyse price action for Ethereum over the short term and update our expected support and resistance areas.

Price Analysis

ETH/USD – SHORT TERM – DAILY CHART

Analysing the market from the short term perspective above, we can see that the market had broken through our previous symmetrical triangle highlighted in our previous technical analysis article.

In fact, price action continued to drop significantly lower through all of our expected support levels to where it is currently trading at a price of $191. Price action has penetrated below September 2017’s price low of $197 and is now trading at over 12 month fresh lows.

We can see that the market has recently found support at a short term downside 1.272 Fibonacci Extension level priced at $181.88. The market is now currently battling at resistance marked by September 2017’s price low at $197.

If the bearish price pressure continues to grow, we expect immediate support to be located at the short term downside 1.272 Fibonacci Extension priced at $181. Further support below this can be expected at the psychological round number handles of $175, $170, $165 and $160. The final area of support we would like to highlight if the market continues further lower is located at the downside 1.414 Fibonacci Extension level priced at $148.47.

Alternatively, if the bulls can regather some momentum at this price level and break above September 2017’s resistance of $197, we expect immediate further resistance to be located at the previous long term 1.414 Fibonacci Extension level priced at $226.

Further significant support above this level can then be expected at the downside 1.618 Fibonacci Extension level (drawn in blue) priced at $271. We can see that this level has provided significant support for the market during August 2018 so this will now be expected to provide significant resistance. Further resistance above this level will then be expected at the long term downward sloping trend line drawn in black.

The technical indicators within the market are heavily favouring the bears at this moment in time. The RSI indicator has dropped far below the 50 handle to trade at oversold conditions. If the RSI can make its way back toward the 50 handle we may see this market find some stability. For the potential to see some gains within the market we must see the RSI breaking above the 50 handle into positive momentum territory.

Let us continue to quickly analyse price action relative to Bitcoin over the short term and highlight any potential support and resistance areas.

ETH/BTC – SHORT TERM – DAILY CHART

Analysing the market from the short termed perspective above, we can see over the past two months price action has declined significantly falling below expected support levels at 0.0407 SATS and 0.03634 SATS to find support at where it is currently trading at the downside 1.618 Fibonacci Extension level priced at 0.02996 SATS.

If the bulls can regather momentum at this area of support and push the market higher, we expect immediate resistance to be located at the previous .886 Fibonacci Retracement level priced at 0.03502 SATS. Further expected resistance above this level can then be located at the previous downside 1.272 Fibonacci Extension level priced at 0.04078 SATS.

Alternatively, if the bears manage to push price action below the support at 0.029963 SATS then we can expect immediate support to be located at a further downside 1.618 Fibonacci Extension level (drawn in purple) priced at 0.028029 SATS.

The technical indicators are in the favour of the bears at this current moment in time. The RSI is currently well below the 50 handle trading at oversold conditions. More worrying, however, may be the fact that the RSI has not been able to break above the 50 level within this market for over an extended period of 3 months. If we are to see any positive momentum within this market it is crucial that the RSI breaks back above the 50 handle to continue further higher.

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