Several rooted projects are offering long-term investors an excellent buying opportunity, as a result of the extended sell-off across most cryptocurrency assets. Deteriorating fundamentals exclude Ethereum from this group. The oldest UK cryptocurrency exchange, Coinfloor, announced plans to delist Ethereum in yet another blow to the crumbling ETH/USD. While it remains the second-largest cryptocurrency behind Bitcoin, it is on track to be overtaken. A new breakdown is expected to emerge and extend the corrective phase in Ethereum.
The Force Index, a next-generation technical indicator, spiked with the ETH/USD as it pushed through its support zone. This move is currently reversing, and the Force Index is anticipated to drop below its descending resistance level, which acts as temporary support, as marked by the green rectangle. Bearish momentum is favored to return and pressure this technical indicator below its horizontal support level, turning it into resistance. A breakdown below its ascending support level is expected to follow and with the Force Index in negative conditions, bears will be in charge of price action.
Bearish pressures increased drastically after this cryptocurrency pair converted its short-term support zone into resistance. The descending Fibonacci Retracement Fan sequence is adding more downside pressure following the breakdown. The converted resistance zone is located between 142.29 and 152.14, as marked by the red rectangle. In combination with the worsening fundamental outlook for Ethereum, including the exodus of developers, technical issues, hashrate contraction as miners are forced to shut down, security risks, and intense competition from TRON, Tezos, and Binance, the ETH/USD is expected to accelerate to the downside.
With the $100 mark in range, a breakdown below it will further crush psychology for the shrinking number of supporters. The current breakout above its support zone located between 111.02 and 120.46, as marked by the grey rectangle, is anticipated to reverse and result in a breakdown. 2020 shapes up to be a challenging year for the ETH/USD, and the next support zone is located between 76.59 and 86.55, from where more downside cannot be ruled out. You can learn more about a support zone here.
ETH/USD Technical Trading Set-Up - Breakdown Scenario
Short Entry @ 121.00
Take Profit @ 76.60
Stop Loss @ 133.00
Downside Potential: 4,440 pips
Upside Risk: 1,200 pips
Risk/Reward Ratio: 3.70
In case of an extension in the Force Index of the breakout above its descending resistance level, the ETH/USD could bounce off of its support zone and move higher. Due to the long-term fundamental deterioration, which is expanding, the upside potential remains limited to its short-term resistance zone. The 50.0 Fibonacci Retracement Fan Resistance Level is anticipated to pressure for more downside and traders should consider this an outstanding selling opportunity.
ETH/USD Technical Trading Set-Up - Limited Breakout Scenario
Long Entry @ 137.00
Take Profit @ 147.00
Stop Loss @ 133.00
Upside Potential: 1,000 pips
Downside Risk: 400 pips
Risk/Reward Ratio: 2.50
