- Ethereum initially tried to rally during the trading session on Tuesday to break above the 50-Day EMA.
- By doing so, the market then looked as if it was trying to make a statement but gave back the gains to end up turning around and forming a negative candlestick.
- The shooting star sits right here at the $1600 level, and it’s likely that you will see plenty of sellers based on the negativity.
Furthermore, it should be noted that the Ethereum market is highly sensitive to risk appetite, especially considering that the market is going to continue to focus on the merge that is coming. The 50-Day EMA is an indicator that a lot of people pay attention to, and you can see it has been both dynamic support and resistance as of late. This is a chart that has been a little extended lately, but we have been drifting lower over the last couple of weeks. The $1400 level underneath could offer support, and if we break down below there it’s likely that we could see this market drop down to the $1200 level.
Noise Ahead
The $1200 level is the top of a consolidation area that extends down to at least $900. Ultimately, this is a market that is going to continue to see that area as important. If we break down below the $900 level, then it’s likely the wood see Ethereum drop quite drastically. If that were to happen, the market is likely to go down to the $400 level, which is where we had taken off from previously.
If we get down to the $400 level, then it’s likely that we would see market participants start to build up a larger position for a longer-term move. I will be acquiring Ethereum if we get anywhere near that area, but that becomes more of an investment and less of a trade. In that situation, you are looking at a trade that could play out over the course of several months, if not years.
On the other hand, if we were to turn around a break above the $2000 level, it allows for the market to go much higher. There is a lot of noise just waiting to happen, but I think the merge has already been priced into the market. As long as risk appetite is relatively poor, Ethereum will struggle as well.
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