Ethereum has formed lower highs and lower lows inside a falling wedge pattern and appears to be edging below support. This chart pattern spans $420 to $720 so the resulting breakdown could be of the same height.
Cryptocurrencies have been under pressure for the most part of the week as investors are wary of more hacks on exchanges or stricter regulatory efforts.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside or that support is more likely to break than to hold. Still, a bounce higher could hit a ceiling at the top of the wedge, which lines up with the 100 SMA dynamic inflection point. A break higher could also hit the 200 SMA dynamic inflection point.
RSI appears to be crawling higher to signal the presence of bullish pressure. Stochastic is pointing down, though, so sellers might still have some energy left. However, this oscillator is nearing oversold levels to signal bearish exhaustion. Turning back up could bring buyers back in.
Ethereum drew some support in the past week from comments by a SEC official citing that it shouldn’t be treated as a security and therefore shouldn’t be subject to the same type of regulation as stocks or bonds.
However, this positive sentiment was later on overshadowed by security threats and the attention on regulation in other countries, such as Japan and South Korea.
Meanwhile, the dollar remained safely supported for the most part of the week, despite trade tensions and losses in the stock market. Apart from that, data has also been below expectations but the US currency appears to be taking advantage of risk-off flows.
Looking ahead, the lack of any positive cryptocurrency updates could keep the bearish trends intact. Furthermore, headlines pertaining to regulation or any other hacks could drive prices much lower.