Ethereum: The price of Ethereum (ETH) has rebounded by around 400 percent after the last time the RSI was oversold. Will it be different this time? Here are the details…
- 1 Ethereum price enters ‘oversold’ territory for the first time since November 2018
- 2 Will ETH price drop to $650?
- 3 Share this:
Ethereum price enters ‘oversold’ territory for the first time since November 2018
Ethereum ETH entered the “oversold” zone on June 12 for the first time since November 2018, according to the weekly relative strength index (RSI). Analysts think the cryptocurrency is oversold after the RSI chart drops below 30. Moreover, they see the dip as an opportunity to “buy the dip,” believing that the oversold signal will lead to a trend reversal. Ethereum’s previous oversold chart emerged in the week ending November 12, 2018, which preceded a price rally of approximately 400 percent. While past performances are not indicative of future trends, the latest RSI dip below 30 raises the possibility that ETH will experience a similar upside pullback in the future.
Let’s say ETH makes a jump where it sees oversold. Next, ETH’s critical challenge will be to regain its 200-week exponential moving average (200-week EMA) near $1,620 as support. If so, the bulls could watch a long upward move towards the 50-week EMA (red wave) above $2,700, an almost 100 percent increase from today’s price. Otherwise, ETH could continue its downtrend, with $1,120 serving as the next target, a level that coincides with the 0.782 Fib line of the token.
Will ETH price drop to $650?
The price of ETH has dropped by more than 20 percent in the last six days, and most losses come after June 10, when the US Department of Labor reported inflation to reach 8.6 percent in May, as we also reported on AmkNews.com. This is the highest level since December 1981. The higher consumer price index (CPI) has fueled fears among investors that it will force the Federal Reserve to raise interest rates more aggressively while cutting its $9 trillion balance sheet. This has dampened appetite for riskier assets, hurting stocks, Bitcoin (BTC) and ETH.
Cryptocurrency analyst Vince Prince fears that the latest ETH drop could continue until the price drops to $650. According to Samurai Trading Academy, at the core of its downside target is a major “head to shoulder” pattern. This model is a classic bearish reversal model with an approximately 85 percent success rate in meeting the profit target. Meanwhile, Glassnode’s analyst known by the alias “Checkmate” has highlighted a potential DeFi disaster that could bring the price of ETH further down to 2022. The analyst stated that the ratio between Ethereum and the market capitalization of the top three stablecoins rose to 80 percent on June 11, and said:
As “most people borrow stablecoins” by providing ETH as collateral, the potential for the Ethereum network to be less valuable than the top dollar-pegged tokens will make the value of the debt higher than the collateral itself. There is a difference as not all stablecoins are borrowed and also not all are on Ethereum. But still, the risk of liquidation is much higher than it was three months ago.
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