Ethereum is making a correction to its short-term ascending trend line and is testing support around the Fibonacci retracement levels. Price is currently at the 50% Fib level around $610 that lines up with the trend line.
The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside. This means that the rally is more likely to resume than to reverse. The gap between the two is also widening to signal strengthening bullish momentum. Also, the 200 SMA lines up with the trend line to add to its strength as a floor.
At the same time, stochastic is indicating oversold conditions to show that sellers are already exhausted at this point and ready to let buyers take over. In that case, a bounce back to the swing high at $713.88 could be seen soon. A larger pullback could still draw support at the 61.8% to 78.6% Fibonacci retracement levels.
Cryptocurrencies took hits across the board, likely on profit-taking at the middle of the week. Sentiment in the industry remains positive, but investors seem to be quick about locking in gains while the rallies still try to gain traction.
Meanwhile, overall market sentiment has been a bit shaky as Wall Street appears poised for another day of losses. This has likely weighed on appetite for higher-yielding assets such as bitcoin and ethereum.
Besides, the recent hack on MyEtherWallet has also led to some weakness for ethereum as investors remain wary of security issues. Ethereum is also at a crossroads while developers are still discussing a controversial code proposal called EIP 999.
According to ethereum Mist browser Alex Van de Sande:
“It’s clear no matter where you stand that the issue is contentious enough that if [EIP 999] goes forward and implements then it will generate a contentious hard fork.
*The market data is provided by TradingView.