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Momentum indicators are favoring further drops ahead, as the Relative Strength Index (RSI) has moved below the signal line, meaning that momentum has shifted. This is consistent with the readings seen in the MACD’s histogram, as positive momentum is starting to fade.
Nevertheless, the path of least resistance at this point seems to be upwards considering that sellers would have to break through three robust support areas to generate meaningful gains.
Even if the sell-off continues, ETH’s maximum downside potential currently stands at around 10% if the price collapses to the $2,170 level – the third horizontal support line drawn in the chart.
Meanwhile, the upside potential is appealing as the next resistance found in the daily chart stands at $2,800 – a 16.7% climb from current levels.
Conservative traders could probably wait for confirmation of a reversal if the price bounces decisively off any of these levels and the move is accompanied by a buy signal in the RSI or the MACD.
For now, the short-term outlook is bearish but both sentiment and technical indicators seem to be telling us that the market could soon find a floor.
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