Ethereum is still struggling after the initial market crash on October 10 that rocked the market. The subsequent market declines have pushed the largest altcoin by market cap toward $3,000, breaking below it for the first time at the start of the week. With the price looking to find support, there is the possibility of a dead count bounce happening that could see the price rise by more than 10%. However, with a dead count bounce being ultimately bearish, the target remains much lower.
Why Ethereum Could Be Headed Lower
Crypto analyst TradingShot, in a recent analysis, outlined how the Ethereum price looks to be caught in a bearish trend since early October. This had first begun after the altcoin put in a new all-time high just above $4,900 before being hit hard in the October 10 market-wide crash.
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Since then, the digital asset has been caught within a Channel Down. This Channel Down is what triggered the double-digit decline that has been recorded for the altcoin since then. As the crypto analyst explains, the Ethereum price has seen a 27.50% decline on both of its bearish legs since this trend was established.
Recently, though, there has been a small turn in the tide after the price dropped below $3,000, and this happened after Ethereum formed higher lows on the 1-Day RSI. Mostly, this is bullish for the cryptocurrency’s price, but the catch is that it is likely only going to be so for the short term.
If the bullish divergence does play out as expected, then the Ethereum price is definitely set for some recovery. TradingShot believes that this recovery could bring the ETH price up by 10%, pushing it up to $3,400 before the bears step back in again.
However, the overall trend still remains bearish, and this could act as a hindrance to this recovery. Once the bears mount enough resistance to stop the rally in its tracks, it is expected that the decline will resume. If this plays out, then it could mean that the recovery was only a dead cat bounce.
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This $3,400 level lies at the 1-Day MA50, which is important because it was the point of rejection back on October 27. Last time, it led to a 27.50% crash for the Ethereum price. This time, once the sell-offs begin again, the crypto analyst believes that this could trigger a sharp crash below $3,000.
The timeframe for this ranges from the end of November to the start of December, giving it only a couple of weeks to play out. The crash is expected to push Ethereum down to $2,650 before finding a bottom, marking a new lower low.
Featured image from Dall.E, chart from TradingView.com