Ethereum has been one of the best-performing assets in 2020, bar none. It beat Bitcoin, gold, stocks, and other assets in the best return on investment, had the $1,200 stimulus check be entirely invested in assets.
But after today’s 10% intraday drop, the top-ranked altcoin is at risk of closing the daily with a bearish engulfing candle. If the bearish candlestick formation confirms, a short-term downtrend may follow.
Ethereum Crashes 10% Intraday, Risk Of Bearish Engulfing If Daily Closes Below $390
Ethereum’s nearly 250% year-to-date rally may be finally ending, as the cryptocurrency plunged 10% today as part of a greater cryptocurrency market selloff. The crypto market is a sea of red, after Bitcoin, Ethereum, XRP, and most top altcoins took a tumble.
Because Ethereum rose among the most during the way up, it has fallen some of the hardest as well.
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On daily timeframes, the drop against the dollar has resulted in a bearish engulfing candle possibly forming. A close below $390 would confirm the bearish reversal pattern.
ETHUSD Daily Bearish Engulfing | Source: TradingView
Japanese candlesticks, either by themselves or as part of a sequence, can provide traders with powerful signals. A bearish engulfing pattern occurs when a red candle close completely envelopes the previous green candle, and then some.
A bearish engulfing candle shows that bears have taken control of Ethereum. However, as severe as daily timeframes may appear, on ETHUSD weekly timeframes, this drop could be a retest of former resistance turned support. If so, things are a lot more bullish than they appear at a glance.
ETHUSD Falls To Weekly Support, Holding Is Critical For Uptrend Continuation
Although the top-ranked altcoin suffered as staggering drop today, the fall landed nearly perfectly at weekly resistance turned support. Often when assets breakthrough important resistance levels, a retest to confirm the support and resistance flip takes place.
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