Ethereum’s recent price action has shown a significant development as it broke below the long-held demand level of 1794.0, which had previously provided support and prevented a price decline since April. The repeated tests of this support level eventually gave way to the selling pressure, leading to its breakdown. Consequently, the price of Ethereum dropped to the new support level of 1641.30, which coincides with a bullish trendline to create a bullish confluence.
Considering the confluence zone formed by the intersection of the support level and the bullish trendline, there is an expectation that this zone will act as a catalyst for the buyers to engineer a bullish reversal. The confluence zone, marked by the support level of 1641.30 and the bullish trendline, presents an opportunity for buyers to regain control and push the price of Ethereum towards the previous demand level at 1794.0
ETHUSD Key Levels
Supply levels: 1910.0, 2112.0 2200.0
Demand levels: 1794.0, 1615.0, 1438.0
Indicators Analysis
Examining the technical indicators, we observe that the resistance Band of the Bollinger Bands exerted significant pressure on Ethereum’s price in April, leading to a subsequent selloff. Throughout April and May, the price lacked clear directional trends and instead oscillated within the Bollinger Bands, indicating a period of consolidation. Additionally, the Stochastic Oscillator currently indicates oversold conditions on the daily timeframe, implying a potential shift in market sentiment.
In summary, Ethereum has experienced a significant breakout as it breached the key support level of 1794.0, paving the way for further downward movement. However, the formation of a confluence zone at the support level of 1641.30, combined with the oversold conditions indicated by the Stochastic oscillator, suggests a potential bullish reversal may be on the horizon. Traders and investors should closely monitor price movements within this confluence zone as it could offer an attractive entry point for bullish positions targeting the previous demand level at 1794.0.
Learn from market wizards: Books to take your trading to the next level