Here is what needs to happen for Ethereum price to rally 20%
|- Ethereum price is currently displaying a triple bearish divergence on the four-hour timeframe.
- A 10% retracement will provide long-term holders an opportunity to accumulate before triggering a 20% upswing to $2,022.
- Invalidation of the bullish thesis for ETH will occur below $1,422.
Ethereum (ETH) price shows an exhaustion of bullish momentum after producing a clear sell signal on the four-hour timeframe. This development could result in a quick drop, but from a long-term perspective, it would be an opportunity to accumulate.
Read More: Assessing chances of Ethereum price rally to $2,400
Ethereum price sets the stage for long-term bulls
Ethereum price has rallied 34% in the last ten days and has set up a perfect place to trap late bulls. The equal highs at $1,841 and the bearish divergence seen on the momentum indicators are two reasons why investors that got in on the rally late will get punished soon.
Market participants can see that the Ethereum price produced higher highs since March 14, but the Relative Strength Index (RSI) and Awesome Oscillator produced lower highs. This non-conformity is termed as divergence and the declining momentum often leads to a reversal in price.
Therefore, Ethereum price could shed 10% and tag the $1,600 psychological level or the monthly level at $1,677.
While this 10% downswing is a good move for short-term traders, investors should note that this move could be a potential buy signal for long-term holders. If Bitcoin price keeps up its bullish outlook, this retracement will allow buyers to recuperate and extend the rally to $2,022. This move would constitute a 20% ascent for ETH.
ETH/USDT 1-day chart
While the optimistic outlook for Ethereum price makes sense, a breakdown of the $1,600 level would be the first sign to be cautious. If the selling pressure continues to build, leading to a flip of the $1,422 level into a resistance level, it would invalidate the bullish thesis for ETH.
Such a move could trigger Ethereum price to retrace lower and tag the $1,377 support level.
Also read: Why Ethereum will emerge victorious in the ongoing bull rally as Tether mints $2 billion USDT
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.