Ethereum price enters "sold" area for the first time since November 2018

Ethereum price enters “sold” area for the first time since November 2018 – Mail Bonus

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).

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.

ETH / USD weekly price card with sold RSI. Source: TradingView

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.

ETH / USD weekly price chart showing Fibonacci support and resistance levels. Source: TradingView

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.

Daily price card ETH / USD against SPX and BTC / USD. Source: TradingView

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.

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.

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.

Mát noted:

“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. “

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