In two short weeks, ETHUSD has devalued by 50% of its market value. With little to no relief for the underwater bulls, ether seems to be accelerating downward as buyer confidence is lacking and showing signs of capitulation. The entire crypto market, as a whole, is showing signs of capitulation as many alts have seen similar devaluations in shorter periods of time than ETHUSD. Similar to many other coins, ether is penetrating long-held support with very little ease:
Figure 1: ETH-USD, 1-Day Candles, Macro Trend
As a general idea of just how extended the market is, take a look at the 50 EMA (the blue curve) in the image above. The 50 EMA acts as a fast-acting equilibrium curve that shows the price relative to its price history. Currently, the market is highly separated from its equilibrium. Often, when this happens, the market goes through a capitulation phase that has a very strong reaction causing both short profit taking and bottom-callers to shove the price strongly back in the direction it came from.
The 127% Fib extension of the most recent bullish rally on ETHUSD reveals a likely target for this capitulation. Historically, this price level (the $230 area) has also served as a key area for buyer interest to step in:
Figure 2: ETH-USD, Daily Candles, 127% Fib Extension
Our current trend is showing an expansion of volume and price spread — very similar to the two v-bottom reversals shown above. Right now, it’s nearly impossible to tell where the true bottom will be, but I would find it highly unlikely to not see a snapback from this strong round of selling across the crypto market.
Something else that’s noteworthy about this move is the recent bear flag ether broke out of:
Figure 3: ETH-USD, Daily Candles, Bear Flag Target
Currently, we are sitting at the very price target of the bear flag shown above. While that is not entirely a bullish signal, it doesn’t give a bit of hope toward the argument of a potential V-bottom reversal. If we continue to drop without any relief for the bulls, it is only a matter of time before the market overextends and rebounds from the so-called “weak hands” capitulating.
- ETHUSD devalued by 50% in two weeks.
- It is currently seeing expanding volume and expanding price spread as it continues to accelerate its descent.
- The price target of the bear flag it broke south of has already been realized and there was little demand stepping in as it cruised straight through historically strong support.
- A likely bottom, should the market continue to capitulate, lies on the 127% fib extension — the $230 area.
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