Crypto assets dropped like a rock this weekend, and it seems that buyers were ready to step up at major support areas. But is the bounce a temporary one? Is there another opportunity for ETH bulls to buy at lower prices?
Another Short-term Support Retest in ETH/USD?
In case you missed it this weekend, we saw a drop in bitcoin against the Dollar after a series of negative headlines, and as usual, the rest of the crypto asset market followed suit. But that drop eventually faded and lead to bounce in across the markets, possibly on a headline out of China that the People’s Bank of China regarded digital currencies as alternative investments.
ETH/USD was among the major crytpos that bounced this morning, finding support after retesting the $2000 major psychological level, which was a strong resistance area back in market. But looking at the chart above, the bounce seems to have draw in sellers once again above the $2,200 handle, and the odds are looking pretty good the market will make its way back to the $2,000.
So, if you’re a longer-term HODLer, this may be another shot to buy on the dip in case you missed this weekend. Watch out for a retest and bullish reversal patterns at the previous support area (between $1,900 – $2,000) before considering fresh longs / adding to longer-term positions. This dip seems to have pretty strong momentum behind it as broad risk sentiment across the financial markets is leaning negative to start the week, so it’s a good idea to get price confirmation before dipping your toes back in.
If we don’t see bullish reversal patterns on another retest of the $2,000, it’s possible we could see more liquidations in the crypto markets, opening up the possibility of a move in ETH/USD down to the $1,800 – $1,850 support area this week. And keep in mind that ETH/USD has a daily average true range of around $150 per day, so a move down to even $1,600 is certainly a possibility with a few days if the sell off gathers steam.
But as we’ve mentioned before, given the longer-term bullish prospects of the crypto assets markets as mainstream adoption continues to gather pace, a dip down to $1,600 to $1,800 is likely to draw in longer-term buyers (including institutional /corporate players who have yet to get into the space), especially if this weekend’s negative rumors of a U.S. Treasury crackdown fail to get confirmed.
What do you guys think? Is the bounce about to be faded into a bigger move lower in ETH/USD?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.