Although Ethereum is the second-largest cryptocurrency by market capitalization, it has traditionally stuck to Bitcoin‘s price movement. Where bitcoin goes, Ethereum follows. The same situation was noted at press time when Ethereum was about to exit the decline pattern following Bitcoin’s hints.
If bitcoin sellers show no sympathy, we might see Ethereum return to $340, and perhaps lower on the charts.
Ethereum 4-hour chart
The 4-hour chart showed that ETH had already breached its rising parallel channel. Moreover, the trend before the channel made it a continuation model, which was the bear flag.
A short position at $369 with a 4% stop-loss [ $384] would be the best entry. Targets for ETH could be immediate support of $340, which would mean a 7.86% drop. This trade gives R 1.91.
The stochastic RSI was already in oversold territory and may experience another downward trend supporting the price drop. However, the RSI indicator had a long way to go before reaching oversold territory. So we can expect the price to easily hit the initial target of $340. However, the second target of $318, while theoretically a perfect target, can be a little tricky.
Although this trade is short-to-medium-term, the long-term chart has been a harbinger of this decline for some time, at least after the price has fallen below $377.
Ethereum 1 daily chart
The one-day chart for ETH showed a trend line stretching from the September 05 low to September 19. After that point, the price closed below this trend line, and this confirmed a downward trend.
Further doubts about the downtrend can be reinforced as the price falls below 50-DMA [yellow]. According to moving averages, the target seemed to be 100 DMA at $333, slightly below the initial target mentioned above.
The one-day chart shows the Stochastic RSI showing a downward trend just above the overbought zone. So ETH’s downward trend was really bad, especially as BTC’s charts showed a similar downward trend in the day-to-day timeframe.
