Ethereum’s recent price action is giving bears the courage to come out of hiding. After all, the No. 2 cryptocurrency is down by over 52 percent from the 2019 peak of $363.30. Some traders are even proclaiming that Ethereum will be “dead money for years.”
In my opinion, Ethereum is a busted bubble with huge overhead resistance.
For traders with no exit plan, this will probably be dead money for years. pic.twitter.com/W8NqY5gZsM
— Danny Merkel (@ChartingTrends) August 29, 2019
While we wouldn’t go as far as saying that the altcoin is dead, we fear that the worst of this round of correction is not yet over. We are seeing multiple signals that point to more downside potential. Our analysis indicates that Ethereum may dump to $140 at a minimum before it can bounce.
Bears Have Taken Control of the Cryptocurrency
Bulls started to lose steam in June 2019 after failing to convert $300 resistance into support. At that point, the market was flashing bearish signals.
We spotted a large bearish divergence on the daily RSI to indicate weakening bullish momentum. On top of that, we saw a significant volume uptick on June 26. The surge in volume was a signal of buying climax.
With these signals, bears took control of Ethereum. It seems that they are not yet done doing damage.
More Bearish Signals as Ethereum Plunges
Ethereum may be oversold on the daily RSI, but opening a fresh long at current levels may not be a wise investment decision. We are seeing the cryptocurrency flail bearish readings indicating that a trend reversal is not yet in sight.
A look at the daily chart shows two bearish breakdowns. The first sign of bearish momentum was the breach for the uptrend line or diagonal support. Bulls tried to reclaim it twice in July and August but they were swiftly rejected.
On top of that, bears also took out our range midpoint of $200. Again, bulls tried to recover that level but their advance was repelled. The rejection led to a waterfall event that sent the cryptocurrency to $164.12 on August 29.
While the coin is trading near oversold territory, the impending death cross between the 50-day moving average (MA) and 200-day MA tells us that there could be more pain ahead. The crossover between the two MAs is a sign of growing bearish momentum.
Thus, it is likely that Ethereum will dump to $140 at the very least before it shows signs of life. If bulls fail to hold that level, we might see the No. 2 cryptocurrency slide all the way down to $100.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.
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