Ethereum is currently facing strong resistance and could potentially test support again. The cryptocurrency still preserves some of its profit from the past weeks but has been losing momentum over today’s trading session.
Ethereum traded at $1860, with a 2% loss, and 5% profit, respectively, over the previous 24 hours. ETH’s price was pushing the sector’s bullish momentum on the back of the narrative around the upcoming “Merge” event, as it will complete Ethereum migration to a Proof-of-Stake consensus.
But, the market’s second largest crypto has been the lagging meme coin, Dogecoin, and Shiba Inu. The cryptocurrencies have posted a rally of 20% and 30%, respectively. They appear poised to continue their gains, before returning back to support levels.
Ethereum’s technical resistance level has been hit hard and the losses have led to other asset selling that contributed to negative crypto market price movements. According to analyst Justin Bennett, the S&P 500 is approaching the top of a major channel that might operate as critical resistance.
Ethereum and other digital assets are moving along with equity markets. Therefore, the price action of major indexes in the legacy financial system has been exercising an influence on cryptocurrencies’ price action.
As seen below, the S&P 500 recorded some gains after bouncing off support at the bottom of the channel and now seems on track to re-test those levels as it has done over the past few months. Bennett told his followers: “This is not where you want to get bullish”.
Bennett added that the U.S.dollar (as measured via the DXY Index), had been reclaiming significant support and could potentially recover territory previously lost. These might lead to additional losses for assets that are risk-on, such as Ethereum.
Since cryptocurrencies can move with stocks they negatively react to upward momentum in the U.S. dollars. He added:
I was “cautiously” bullish in the “short term” last week. Since then, bearish patterns have developed and the $DXY has reclaimed substantial support Monday.
History repeats Ethereum’s critical levels
Furthermore, a new report from research firm Arcane Research acknowledges the importance of “The Merge”. This has pushed ETH past its 2022 peak when compared to Bitcoin’s (BTC), which is for the ETHBTC trade pair.
“The Merge” hype and narrative pushed ETH to peaked at 0.0881 BTC, last week. This is another significant resistance level for the cryptocurrency, as it moves closer to the 2021 high of 0.0886. Arcane Research highlighted the importance these levels have:
Ethereum trades at lower levels than BTC over 196 days (or 8.62%) since May 2016. Since January 1,St 2021, ETH has only closed at higher levels than today’s 39 times, or 6.59% of all days (…).
In that sense, ETH’s price bullish momentum might not be “sustainable”, as Arcane Research noted. However, the research firm didn’t rule out “The Merge” potential to drive ETH into price discovery on the ETHBTC pair.
