Ethereum has fallen 32% in a week, and its value has fallen 18% in the last 24 hours. Overall, the cryptocurrency market has seen its biggest drop this year.
Ethereum (ETH) price action on the daily chart shows a sharp drop with the current price at $2,350, down 12.35% on the day. This drop has brought Ethereum below the lower Bollinger Band, currently at $2,650, a key index indicating that the asset may be oversold.
Bollinger Bands indicate increased volatility, with the bands widening significantly. Ethereum below the lower band usually indicates that the asset is oversold and may bounce back, indicating bearish pressure if the price does not recover soon.
ETH Balance Volume (OBV) confirms this bearish sentiment. Currently, OBV is 43.49 million, having dropped sharply along with the price drop, indicating that selling pressure is significant.
Since downward price movement is associated with increased volume, if ETH’s OBV continues to decline, it would indicate ongoing selling and potential for further declines in Ethereum price.
ETH Weekly Chart in Critical Condition
The weekly chart shows that things aren’t looking much better for Ethereum. The price has broken through the lower Donchian channel, which is at $2,111. The upper and middle Donchian channels are currently at $3,977 and $3,044, respectively.
This breach of the lower channel indicates a strong bearish trend as it shows that the price has made new lows not seen in the last 20 trading periods. A weekly close below this level could signal further downside risk.
Moreover, the Relative Strength Index (RSI) on the weekly chart is currently at 38.55, below the recent high of 54.90. If the RSI drops below 30, it will confirm oversold conditions, potentially leading to a short-term bounce at $2,800 or higher.
However, the current trend shows weakening momentum and unless there is a sharp reversal, downward pressure on ETH may persist.
What’s Next for Ethereum?
Looking ahead, Ethereum’s immediate future largely depends on its ability to recapture key support levels. On the daily chart, a recovery above the lower Bollinger Band at $2,650 could stabilize the price.
Meanwhile, on the weekly chart, a return to the Donchian Channels, especially above the middle band at $3044, would be a positive sign.
However, if the current bearish momentum continues, we could see Ethereum test lower support levels around $2,000, with further declines likely if overall market conditions remain unfavorable.
Analyst Benjamin Cowen argues that Ethereum could stabilize near its current levels in the short term before potentially experiencing another downturn, especially if macroeconomic conditions such as rate cuts play out similarly to past market cycles.
#ETH is back to this trend line
If 2019’s example is followed, these levels will hold for a few weeks and then fall again after the Fed cuts rates.
No guarantees, just following the most helpful analog that turned out to be the best guide this year.
It’s always worth taking precautions pic.twitter.com/jsSTce8lOl
— Benjamin Cowen (@intocryptoverse) August 5, 2024
Additionally, market veteran Peter Brandt suggests that Ethereum is close to bottoming out. With a rectangle pattern ranging from $4,500 to $2,814, the analyst expects the bottom to be around $2,000, suggesting that this target has almost been reached.
The lower target from the rectangle above is almost reached. But of course, we all know that charts don’t work. $ETH pic.twitter.com/oQONPEGaBS
— Peter Brandt (@PeterLBrandt) August 5, 2024
