Ethereum struggles to recover from a drop below $3,000. The price of Ethereum fell below $3,000. This was a critical price level for bulls. Since then, there has been an endless string of crashes and dips. There are support and resistance levels for cryptocurrencies like Ethereum that are crucial to the success of this digital asset. Just above $2,500 is one of these support levels.
This point has been maintained so far by the digital asset. These numbers indicate that bulls continue to gain significant support. It is still uncertain at the moment, as momentum has fallen and selling pressure has increased. It must break its next resistance point in order for Ethereum to have any chance of a balanced rally. The price is now at $2,600.
SMA continues to resist for 50 days
Ethereum needs to beat some milestones in the near term to maintain a bullish trend. The 50-day simple, moving average is one of them. The average price at which investors purchased cryptocurrency in the past few weeks is shown by this indicator. The SMA tells investors if the price is still being purchased or whether they are withdrawing.
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It had traded well above the 50-day SMA in Ethereum for most of 2021. But, it would be more challenging than we expected. The new year will bring many crashes to the market. Ethereum has fallen along with the rest of cryptocurrency. ETH has started trading below its 50-day SMA, which is even more concerning.
The short-term disadvantage of the digital asset is that it has not been purchased at the same average price as the last couple weeks. Ethereum currently sits at $2574 and is significantly below its 50-day average price of $2,891.
ETH drops below the 50-day SMA. Source: TradingView.com| Source: ETHUSD on TradingView.com
While falling below this SMA is not necessarily a sign of a bearish trend in the long-term, for the immediate 50-day SMA shows a very gloomy picture. This is combined with the fact that ETH fell below its 20 day SMA makes it appear this downtrend may continue.
However, can Ethereum bounce back?
The current trends suggest that we are entering the early stages of a bull market. However, it won’t be the first time investors have fallen into a bear trap. Ethereum’s rally may still be far from over if this is the case. Instead, another possible pump-up could occur.
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Long periods of low momentum have been characteristic of bullish rallies that last for a very long time, such as the current one. Mostly a result of investors accumulating at what they believe to be ‘discount prices’, taking more supply out of circulation and pushing up the value.
To achieve this, ETH would need to beat $2,654 as its next resistance level. Then, it would need to trade above the 50 day SMA for a week. These are likely to be met and then the digital asset might see another bull run.
Featured image taken from Admiral Markets chart on TradingView.com