ETHUSD is moving sideways today following yesterday’s sizeable loss. It broke the January 4 upward sloping trendline, prompting the first decent correction since the start of the year. It is currently settling nicely inside the 1,500-1,700 rectangle that has formed since January 16, just above the 23.6% Fibonacci retracement level of the April 4, 2022 –June 18, 2022 downtrend of 1,510. The bears have failed to break this level on two separate occasions during January.
The momentum indicators appear to be on the bears’ side at this juncture. The RSI has been on a downward path, and it is currently testing the 50-level threshold. Similarly, the stochastic oscillator has turned lower, moving almost in a vertical fashion and thus revealing the strength of the current move. On the other hand, a golden cross between the 50- and 200-day simple moving averages (SMAs) could offer the bulls some reason to rejoice.
Should the bears manage to break below the 1,510 level and the rectangle, the next target could be at the 1,359-1,452 range, populated by the 50-, 200- and 100-day SMAs. Even lower, the 1,262 level set by multiple lows and highs during 2022 could prove even tougher to crack.
On the other hand, the bulls would be content with a move above the January 4 upward sloping trendline and a subsequent test of the upper boundary of the rectangle at 1,700. Higher, the September 11 high of 1,790 and the 38.2% Fibonacci retracement at 1,907 could prove to be stronger resistance points.
To sum up, yesterday’s drop seems to have woken up the bears. A move below the 1,500 area could prove a catalyst for further correction towards the 1350s area.
