Ethereum tumbled all the way down to $500 and this level is holding as support for now. A strong bounce could lead to the formation of a double bottom reversal pattern, but the current consolidation looks like a continuation signal.
In particular, ethereum appears to be forming a bearish flag and a break below the $500 level could lead to a drop of the same height as the mast. This spans $500 to $620, so the resulting drop could take price to $380.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, a downside break is more likely to happen than a bounce higher.
RSI is still moving up, though, so buyers may still have the upper hand for now. Reaching overbought levels and turning lower could draw sellers back in and lead to a continuation of the selloff. Stochastic is also approaching overbought conditions to signal that buyers are tired and sellers could return soon.
Cryptocurrencies suffered a sharp selloff to start the week on news of a South Korean exchange hack. Even though only smaller altcoins like Pundi X were affected, investors remain wary of security issues in the industry.
Meanwhile, dollar bulls are anticipating an interest rate hike from the Fed later this week and indication that two more hikes are in the cards could bring more gains. Prior to this, the CPI will be release and strong results could further boost hawkish expectations. Weak results, on the other hand, could downplay any optimistic remarks or add to slower tightening prospects.
Improving sentiment in the financial markets on account of the Trump-Kim meeting and easing trade tensions could also prove positive for the dollar and negative for bitcoin, which sometimes takes safe-haven flows on geopolitical risks.
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