Ethereum (ETH) has struggled to maintain the upward momentum and form a bullish structure since breaking out of a long-term consolidation pattern.
ETH has been declining since hitting an all-time high of $4,868 in November. After a bounce this January, the price made a lower high in March (red icon) and has been falling at an accelerated rate since then.
The downside movement so far has reached a low of $1,700 on May 12.
An important development is that the price has broken out of an ascending parallel channel it previously had since May 2021. A breakdown of such a long-term structure could result in a similar long-term downtrend.
Besides, the RSI has declined below 50, which is considered a bearish trend signal.
The daily chart provides a mixed outlook. On May 8, the price broke out of a descending parallel channel.
Later, it validated it as resistance twice, most notably on 31 May and 7 June (red sign).
However, the RSI has generated a bullish divergence (green line) with the trendline still intact.
Therefore, while the price action is bearish, the readings from the RSI are bullish.
A closer look at the six-hour time frame shows that ETH is trading inside a symmetrical triangle. While this is considered a neutral pattern, it is occurring after a downward movement.
As a result, it is possible that it may continue the downward movement.
ETH wave count analysis
cryptocurrency trader @TheTradingHubb Tweeted a chart from ETH, noting that the price may soon complete wave A of the long-term ABC correction.
Although it is a possibility, it is not yet certain that wave A is complete.
If the short term A:C (white) wave ratio is 1:1, it will hit a low of $876 before a reversal.
Furthermore, the exact size of the upcoming retracement is yet to be determined.
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