Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice
As of its ATH, the king alt has been in a steep downtrend for the past four months. The descent saw a clash between the buyers and sellers at the $3,100-mark Point of Control (POC, red).
Assuming the altcoin keeps up with its historical trends, ETH wants to test the $2,862 level before entering a potential low volatility phase on its Bollinger (BB) bands. The near term retracements may find support near USD 2,500 before the alt continues to mark higher lows.
At the time of writing, ETH was trading at $2,736.6, up 6.42% in the past 24 hours.
ETH Daily Chart
Since the altcoin fell from its POC, it has seen multiple bearish engulfed candlesticks on amplified volumes propelling ETH to hit its six-month low on Jan. 24. Also, the BB (red) average stood as a solid resistance throughout the low.
Interestingly, ETH formed a bearish widening wedge (white) over a longer time frame (one month). Historically, the alt saw a strong reversal from its 13-month bullish trendline support (yellow, dashed). This reversal rally then stopped at the POC. In the past month, ETH also formed a falling wedge (reversal pattern) on the daily chart.
Can the second largest crypto repeat its history? If so, a possible retest of the $3,100 POC is conceivable in the coming days. But before that, it will face barriers at the $2,800. This level is a confluence of its instantaneous resistance and the 50 EMA (cyan). So a possible test of trendline support before the pattern topples should not surprise investors/traders.
With the RSI marking higher lows, it diverged bullishly with the price and confirmed buying power at its trendline support. Going forward, a close above the midline would increase the likelihood of further recovery to the 54-point resistance.
Also, the MACD lines were on the cusp of a bullish crossover. If they cross, they still need to cross the zero line to claim uninhibited bullish momentum.
Given the harmony between multiple factors, a near-term pullback of $2,800 seemed likely. After this, if the bulls muster enough strength on larger volumes, a pattern breakout could be lurking around the corner. In addition, investors/traders should pay close attention to Bitcoin’s movement as ETH shares a 94% 30-day correlation with it.