Native Ethereum Ether (ETH) tokens entered their “sold” territory on June 12, for the first time since November 2018, according to the Weekly Ratio Index (RSI).
This is the last time $ ETH went sold on the weekly (has not confirmed here yet).
I had no followers, but macro bottom checked it.
Note, you can push much lower on the weekly rsi, not trying to reach the bottom. https://t.co/kLCynTKTcS
– The Wolf Of All Streets (@scottmelker) June 12, 2022
ETH eyes abandoned jump
Traditional analysts believe the asset is selling excessively after its RSI reading falls below 30. Furthermore, they see the decline as an opportunity to “buy the dip,” believing that an oversold signal would lead to a reversal of development.
Ether’s previous headline reading appeared in the week ending November 12, 2018, which was preceded by an approximately 400% price increase, as shown below.
While past performance is not an indication of future developments, the latest RSI move raises the possibility of Ether undergoing a similar – if not as sharp – reversal in the future.
Suppose ETH records a bounced jump. The immediate challenge for the ETH / USD pair to restore the 200-week exponential moving average (200-week EMA; blue wave) would be close to $ 1,620 in support.
If that happens, bulls could expect a long-term upgrade toward the 50-week EMA (red wave) over $ 2,700, a nearly 100% increase from today’s price.
If not, Ether could continue to decline, with $ 1,120 as the next target, points that coincide with the 0.782 Fib line of the symbol, as shown in the chart below.
Macro headwind and $ 650 Ether price target
The RSI-based bullish outlook appears to be against a storm of bearish headwinds, ranging from persistently higher inflation to classic technical indicators with downward bias.
In detail, Ether prices fell by more than 20% in the last six days, but the biggest loss was after June 10, when the US Department of Labor announced that inflation had reached 8.6% in May, the highest since December 1981.
Related: The total market value of cryptocurrencies falls below $ 1.2T, but data shows that traders are less inclined to sell
A higher consumer price index (CPI) strengthened fears among investors that it would force the Central Bank to raise interest rates harder at the same time as its $ 9 trillion balance sheet shrank. It reduced appetite for riskier assets, hurting stocks, Bitcoin (BTC) and ETH.
Independent analyst Vince Prince fears the latest ETH cut could extend until it reaches $ 650. At the heart of its deficit target is a massive “head and shoulders” – a classic bearish reversal pattern with 85% success in achieving its profit target, according to the Samurai Trading Academy.
The great head-and-shoulder formation predicted earlier #Ethereum has now been completely confirmed …
– Vince Prince (@Vince_Prince_) June 12, 2022
At the same time, Glassnode’s chief analyst pointed to the chain, known by the pseudonym “Checkmate”, as a possible DeFi disaster that could collapse the Ether price further into 2022.
The analyst pointed out that the ratio between the market value of Ethereum and the top three stablecoins increased to 80% on 11 June.
The ratio is now 80%
– _Checkɱate ⚡ (@_Checkmatey_) June 12, 2022
Since “most people borrow stablecoins” by providing ETH as collateral, the possibility that the Ethereum network will be worth less than the top dollar-linked tokens will make the value of the debt higher than the collateral itself.
“There are nuances where not all stablecoins are borrowed, and also not all are on ethereum. But nonetheless, there is a risk of liquidation [is] much higher than it was three months ago. “
The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.
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