Ethereum Price Prediction: Current price correction gets labelled a “bear trap” by popular traders
Daily Ethereum ETH Technical Analysis
- ETH has dropped below $540 after failing to cross the $600 zone.
- MyEtherWallet opens Ethereum 2.0 staking services to its users.
Ethereum is not immune from the market-wide price correction that’s currently affecting the whole crypto space. As mentioned yesterday, Ethereum bulls have faced a massive wall at the $600 resistance, and the price has since dropped down to $540 over the last three days. Let’s take a more in-depth look.
How much is ETH going to drop?
Ethereum had a highly bullish November, wherein the price nearly doubled, going up from $385 to $615. However, after facing massive resistance in the $600-zone, the price has dropped down. The relative strength index (RSI) in the monthly time frame is trending around 62.50, showing that the sellers still have a lot of room to spread their influence.
Image: ETH/USD monthly chart
Now, let’s reduce the time-frame and see what’s going on with the price. Over the last three days, the smart contract platform has dropped below the 20-day SMA and is now racing towards the $520 support line.
Image: ETH/USD daily chart
This $520 support line needs to hold firm. Otherwise, ETH will drop below $500 and fall to the 50-day SMA ($485). Following that, the next viable level of support is all the way down at the 200-day SMA ($360).
What can the bulls do to turn things around?
If the price does fall below $500, the buyers can’t afford a steep drop. In that case, the bulls will need to fortify the 50-day SMA and make sure that they gather enough momentum to bounce and break past the 20-day SMA. After that, they will need to re-negotiate with the $600 resistance zone. Breaking past $600 should give them enough firepower to enter the $1,000 zone.
Many traders like “@CryptoUB” are calling this recent price drop a bear trap. In that sense, a bullish breakout following this recent correction is completely expected.
There is even more positive news that will be greatly appreciated by the Ethereum community.
MyEtherWallet to provide Ethereum 2.0 staking
MyEtherWallet, one of the most popular Ethereum software wallets in the market, will be exposing their massive user-base to Ethereum 2.0 staking. MyEtherWallet has partnered with node-hosting service "Staked" to give its browser and mobile wallet users the option to stake ETH tokens into the Ethereum 2.0 Beacon Chain deposit contract. Users will need to stake 32 ETH to participate, and Staked will run the validator node for them. This lowers entry barriers for everyday users who may not have the technical know-how needed to run a full node.
This is very positive news for long-term price valuation since it leverages MyEtherWallet’s huge user-base and brings in a host of new validators into the ecosystem.
Key Price levels to watch
Despite these long-term positive implications, the fact remains that the short-term price action will be negative. As such, there are two key price levels for investors to keep an eye out for – The $520 support line and the 50-day SMA ($485). The buyers will be watching these two like a hawk to ensure that the price finds enough support to bounce back up.