The price of Ethereum’s native token Ether fell on July 26, decreasing hopes for a sustained price recovery. After a drop of roughly 5% in the ETH/USD pair, there was a slight rebound to more than $1,550.
Ethereum rejected at $1.650
CoinGlass data reveals that these overnight moves have liquidated Ether positions worth over $80 Million in the past 24 hours.
Hourly chart of the ETH/USD exchange rate Source: TradingView
This sawsaw action revealed an underlying bias conflict between traders caught between two very different market fundamentals.
The first is the optimism surrounding Ethereum’s possible transition to proof of stake in September. This has led to Ether’s price recovering 45% month to date.
This bullish hype, however, is in contradiction to macroeconomic headwinds. These include the Federal Reserve’s and European Central Banks’ hawkish stances. This put pressure on risk assets, and Ether price fell 68% from its record high at $4,950.
The short-term could offer some upside for ETH prices. Based on Ether’s recent swings within an ascending channel pattern as illustrated below, PostyXBT analyst predicts that Ether will experience an interim upside retracement.
Four-hour chart of the ETH/USD price with ascending channel setup. Source: TradingView
If the pattern continues, ETH could see a $1,700 increase in price before July’s close.
Bearish divergence
Nevertheless, extreme disparities can be seen when you compare the recovery trend in conjugation to Ether’s four hour relative strength index (RSI), a momentum oscillator indicator.
Interestingly, Ether has been making higher highs than its RSI since July 18th.
This indicates a bearish divergence in ETH’s momentum and price, which means bulls are losing their grip on this market and a possible downtrend.
ETH/USD four-hour price chart featuring bearish divergence. Source: TradingView
Ether could also break below its ascending channel’s lower trendline. This coincides with two additional price supports: The 50-4H exponential moving Average (50-4H EMA, the red wave) at $1,500, and the 0.5 Fib line at $1,475.
Related: Is Ethereum Merge Hopium a Bull Trap?
These key support would be lost, and prices could fall below $1,350 (the $0.382 Fib Line and the blue 200-4H EMA Wave) in August. This is a 10%-15% drop from today’s price if this bearish scenario plays out.
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https://cointelegraph.com/news/ethereum-s-bearish-u-turn-eth-price-momentum-fades-after-1-6k-rejection
