Ethereum is still struggling after the initial October 10 crash that shook the market. Subsequent market declines pushed the largest altcoin by market cap toward $3,000, falling below it for the first time earlier this week. As the price looks to find support, there is the possibility of a dead count bounce that could see the price increase by over 10%. However, as the dead count rebound is ultimately bearish, the target remains much lower.
Why Ethereum Could Go Down
Crypto analyst TradingShot, in a recent analysis, explained how the price of Ethereum appears to be caught in a downtrend since early October. This started after the altcoin hit a new all-time high just above $4,900 before being hit hard during the October 10 market crash.
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Since then, the digital asset has been trapped in a Channel Down. This Channel Down is what triggered the double-digit decline recorded since then for the altcoin. As the crypto analyst explains, the price of Ethereum has seen a decline of 27.50% on its two bearish legs since this trend was established.
Recently, however, there was a small trend reversal after the price fell below $3,000, and this happened after Ethereum made higher lows on the 1-day RSI. Generally, this is bullish for the price of the cryptocurrency, but the problem is that it will likely only be bullish in the short term.
If the bullish divergence occurs as expected, then Ethereum price is definitely ready to recover. TradingShot estimates that this rally could boost the price of ETH by 10%, pushing it as high as $3,400 before the bears return.
However, the overall trend still remains downward, which could hamper this recovery. Once the bears have enough resistance to stop the rally in its tracks, the decline is expected to resume. If that happens, it could mean the recovery was just a dead cat bounce.
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This $3,400 level is at the 1-Day MA50, which is important because it was the rejection point on October 27. Last time, this led to a 27.50% crash in the Ethereum price. This time, once the selling resumes, the crypto analyst believes that it could trigger a sharp crash below $3,000.
The calendar runs from late November to early December, leaving only a few weeks to unfold. The crash is expected to send Ethereum down to $2,650 before finding a floor, marking a new low.
Featured image of Dall.E, chart by TradingView.com
