Despite the drawdown last week, Ethereum continues to be bullish. However, bulls need to make a reversal in the near future, otherwise long-term indicators will start giving bearish signals.
Long term support is still intact
On September 1, Ethereum (ETH) peaked at $ 489.57, but collapsed the next day. At the time of writing the analysis, the pair is trading around $ 336.
Nonetheless, the overall bullish structure behind the rally remains in place as the price has not even reached the upside support line drawn across the two rally lows formed after the March bottom appeared - let alone break that support.
Technical indicators do not promise an early reversal, but they have now reached the highest levels of oversold since the market crash in March.
In addition, the stochastic RSI has formed a bullish crossover.
On the weekly chart, the price is approaching the long-term support area of ??$ 320, which previously played the role of resistance. As long as the pair is trading above this level, the recent decline can be seen as retesting this broken resistance in order to validate it as support.
However, technical indicators are showing a loss of momentum. In addition, the recent decline was preceded by strong bearish divergence signals on the weekly RSI.
If the market does not start to reverse near current support, long-term indicators may start giving bearish signals.
Cryptocurrency trader @CryptoMichNL shared an Ethereum chart on Twitter, noting that the price could consolidate for a while before starting to rise. He highlighted important resistance at $ 400, and then at $ 450.
As long as the trades are above the long-term area of ??$ 320, this scenario seems to be the most likely.
Wave analysis
Beginning on March 13, a bullish impulse five-wave structure (white on the chart) can be distinguished on the chart. Most likely, the market has completed the formation of the fourth wave (blue), and then another phase of growth should follow.
Within this structure, the 3rd and 5th waves are extended. Given the fact that the fifth wave is the longest of the three bullish waves, it makes sense to assume that the 5th wave will also be the longest and reach the $ 550 area.
The main argument in favor of the bullish structure is the formation of a high at $ 485. Given the many overlaps and the lack of a well-defined five waves, the price action looks more like an A-B-C correction or a complex correction.
Since an impulse move cannot end with a correction in the same direction, another possible option is that the price is still correcting within sub-wave 4.
Thus, the Ethereum rate should receive support in the area of ??long-term support of $ 320 and then start a new phase of growth.
