Ethereum Needs To Break Above $2,650, But Why Won’t It Budge?
Ethereum continues to struggle after falling below $3,000. This price point was critical for bulls to hold and ever since bears dragged the price below it, it has been a continuous display of dips and crashes. For a cryptocurrency like Ethereum, there are resistance and support levels that are very important for the digital asset. One of those support levels sits just above $2,500.
So far, the digital asset has managed to maintain above this point. This shows that bulls are mounting significant support. However, with momentum falling and selling pressure up, it remains shaky at this point. For Ethereum to maintain any semblance of balance towards a bull rally, it must beat its next resistance point. This now sits above $2,600, but what is the price doing?
50-Day SMA Continues To Resist
For the short term, there are some important milestones that Ethereum must beat to secure a bullish trend. One of these is the 50-day simple moving average. This points to the average where investors have been purchasing the cryptocurrency for the last couple of weeks. A position above or below this SMA always tells if investors are willing to keep purchasing the coins at a certain price or if they have pulled back.
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For Ethereum, it had mostly traded above this 50-day SMA for the better part of 2021. However, the new year would prove to be more daunting than expected as crashes have rocked the market. This has seen Ethereum decline alongside the rest of the market. But more importantly, ETH slipped so far down that it has begun trading below the 50-day SMA.
This puts the digital asset at a disadvantage in the short term given that investors are no longer willing to purchase at the average price they have been the past couple of weeks. Sitting at $2,574, Ethereum is well below the 50-day average of $2,891.
ETH falls below 50-day SMA | Source: ETHUSD on TradingView.com
Falling below this SMA does not necessarily mean a bearish trend for the long term but for the short term, the 50-day SMA paints a pretty gloomy picture for the digital asset. Combined with the fact that ETH has also fallen below its 20-day SMA, it seems this period of downtrend might continue.
But Can Ethereum Bounce Back?
Current trends point to what can be assumed to be the beginning stages of another stretched-out bull market but it will not be the first time that investors have been caught in a bear trap before. If so, then Ethereum may not be done just yet with its rally. Rather, there could be another pump-up that could happen.
Some of the longest bullish rallies have been characterized by a long period of low momentum, like the one the market is currently in. Mostly a result of investors accumulating at what they believe to be ‘discount prices’, taking more supply out of circulation and pushing up the value.
For ETH to do that though, it would have to safely beat the next resistance point at $2,654. After which, a solid week of trading above the 50-day SMA. If these are fulfilled, then the digital asset may see itself on another bull rally.
Featured image from Admiral Markets, chart from TradingView.com