Ethereum is moving sideways, but it is reasonable to expect a further drop.
Photo by Nick Chong on Unsplash
ETH’s behavior is like BTC’s these days.
The second cryptocurrency by market cap is going sideways, in a range between $1677 and $2278.
The resistance zone is around the 38.2% Fibonacci level, while the support zone is around the 61.8% Fibonacci level.
The Bollinger Bands are narrowing: this may show that the sideways correction will not end in the short run.
ETH/USD Daily chart, BINANCE - TradingView
Volume hasn’t shown signs of a sharp reversal or correction yet.
The positive volume increase on June 28, above the 20-day volume moving average, just led the price towards the 20-day price moving average, but it was still not enough to predict a bullish reversal.
An analysis of recent price and volume suggests that a bearish divergence is in place.
ETH/USD Daily chart, BINANCE - TradingView
So, even if Ethereum’s price could rise in the next few days, it is reasonable to expect a topping behavior that could extend the sideways correction before a definitive drop.
This article doesn’t represent financial advice: always do your own research before investing!
What are Fibonacci levels?
Fibonacci levels show potential support and resistance areas. We derive these levels from the Fibonacci sequence. Leonardo Fibonacci was an Italian thirteenth-century mathematician, who discovered a sequence of numbers where the ratio of any number to the next higher is between 0.618 and 1, while the ratio of any number to the next lower is between 1.618 and 1. In markets, we usually express the Fibonacci retracement levels in percentage and the most common are 23.6%, 38.2%, 50%, 61.8% and 78.6%. Fibonacci levels are reliable because they fully comply with the self-fulfilling prophecy that always works in markets - since everyone believes in and does the same thing, that thing becomes true. In fact, the Fibonacci numbers and ratios have several applications and you can find them in nature: for this reason, traders and investors think these numbers correspond to levels of retracement and extension, and they use them as a guideline to decide when to buy or sell. If you analyze markets, you can find that actually most of the support and resistance zones correspond to a Fibonacci retracement or extension level.