Ethereum has faced a strong correction over the past few days that easily overshadows Bitcoin’s move. From the local highs near $490 to the local lows, the cryptocurrency fell by over 35%, shocking most investors as they were bullish just days before.
ETH has already bounced since falling as low as $315, undergoing a rapid 14% rally to $360 on Sunday morning.
While key supports in the low-$300s were held due to this bounce, more technical signals suggest that Ethereum has room to slide.
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Ethereum Has Room to Drop
Ethereum is prepared to move lower after already correcting by over 35% in the span of four days.
A Telegram channel tracking the Tom Demark Sequential reported on Sunday that the leading cryptocurrency has formed a bearish signal on its weekly chart. The signal is a Tom Demark Sequential “Quasi Sell 9” candle, which is a candle type often seen when an asset has reached a bearish inflection point in its trend.
Chart of ETH's price action over the past year with a Tom Demark Sequential analysis by a Telegram group tracking the indicator. Chart from TradingView.com
Prior to the ongoing correction, one trader said that simple technical analysis indicates Ethereum was primed to fall to $290 after losing the support around $370:
“#Ethereum has formed a broadening formation that normally has no preferred direction of a breakout. The bottom of the formation matches a long-term S/R level. If it is broken, the next potential target is at ~290$ – the second support and a 50% Fibonacci retracement.”
Chart of ETH's price action over the past year with analysis by crypto trader and chartist "CryptoHamster" (@CryptoHamsterIO on Twitter). Chart from TradingView.com
Other analysts have noted that there is little historical support until $290, which sits 18% below the current market price of Ethereum.