After recording a day high of $870 during Monday's trading sessions, ethereum price has been steadily dropping ever since reaching a low of $838.46 early during Tuesday's sessions. As we expected during our ethereum analysis for March 5th, the price has been moving through a "descending channel" during the past 24 hours. Repeated bullish bursts followed by downwards price correction attempts have been evident since February 27th.
So, will ethereum price continue on cycling through the descending channel? Can we expect the resistance around the 38.2% Fibonacci retracement to be tested during the next 24 hours?
Rising support level evident on the 2 hour ETHUSD chart:
We will examine the 2 hour ETHUSD chart from Bitfinex, while plotting the 50 period SMA, the Bollinger Bands indicator, and the Stochastic oscillator. We will also extend Fibonacci retracements between a low of $787 and a high of $979, as shown on the below chart. We can note the following:
- During Monday's trading sessions, ethereum price overshot temporarily above the level of the resistance around the 38.2% Fibonacci retracement ($860.34) scoring a high of $870. Thereafter, the price dropped down below this critical resistance level to complete another downwards price correction attempt. As shown on the above chart, the market's movement throughout the descending channel has been characterized by repeated cycles each consisting of a bullish phase followed by a downwards price correction attempt.
- The last downwards price correction attempt has been completed earlier during Tuesday's trading sessions, recording a low of $838.46. This low is higher than the low recorded during the previous downwards price correction attempt ($834.46). As such, a rising support level (upwards sloping bluish trend line on the above chart) is beginning to become evident on the 2 hour chart, which reflects that the market's bulls are gaining strength.
- A new bullish phase is expected to push ethereum price upwards towards the upper border of the descending channel during the next 24 hours. The bullish phase has already begun right after the day low ($838.46) was recorded earlier on Tuesday. Throughout the descending channel, the bullish phase usually started when candlesticks began touching the lower Bollinger band, which represents the same scenario taking place at the time of writing of this ethereum price analysis. The bullish phase is expected to take ethereum price to test the resistance around the 38.2% Fibonacci retracement ($860.34).
- Even though ethereum price is still below the 50 period SMA, it will most probably continue on rising during the next 24 hours. This is evidenced by the Stochastic oscillator whose value is currently around 20, so ethereum is more or less oversold. As such, we expect its price to rise so that the market would be more stable, especially that the Stochastic's curve is sloping in an upwards direction.
Conclusion:
Ethereum price failed to consolidate above the resistance around the 38.2% Fibonacci retracement during Monday's trading sessions, falling down to a day low of $838 on Tuesday. As per our technical analysis, ethereum price will most probably rise during the next 24 hours to attempt testing the resistance around the 38.2% Fibonacci retracement ($860.34).
Chart from Bitfinex, hosted on Tradingview.com