- I examine Ethereum’s continued weakness as it struggles with the 200-day EMA.
- With resistance capping rallies and risk appetite fading, I expect further downside toward $3,000 or even $2,500 unless momentum breaks above the 50-day EMA.
Ethereum initially tried to rally during the trading session on Tuesday, but you can see it is struggling with the 200-day EMA and has since fallen. This looks a lot like a market that is trying to do everything it can to go lower, and I think it will test the crucial $3,300 level, which opens up the potential of a drop down to the $3,000 level, which I think is the real goal here.
200 Day EMA
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Keep in mind that the 200-day EMA has offered resistance over the last couple of days, and it has been supported a couple of times previously. Short-term rallies continue to offer resistance and, I think, selling opportunities given enough time. If the market were to drop below the $3,000 level, it's likely that Ethereum really starts to fall apart. I also anticipate that this would probably coincide with Bitcoin dropping significantly below the $100,000 level.
Ultimately, there are a lot of concerns out there about risk appetite and, of course, the Federal Reserve keeping interest rates tighter than anticipated. The bond market certainly doesn't seem to be overly impressed by the Federal Reserve talking about cutting rates. So, all things being equal, I think we've got a situation where a lot of institutions just aren't willing to put a lot of risk on the books right now, at least as far as cryptocurrency is concerned.
If we could break above the 50-day EMA, then maybe I would consider going long. But given enough time, I think it opens up the possibility of a move to the $4,500 level. Ultimately, this is a market that I think, given enough time, will probably drop. But the question then is, will we get an opportunity to buy Ethereum at a cheaper price? I think we do, but it could be as low as $2,500. As things stand right now, I continue to fade rallies.
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