Over the last few days, Ethereum [ETH] saw a volatile breakdown from its three-month trendline resistance (white, dashed). The 20 EMA (red) has substantially impaired the buying ability for quite a few months now.
The effects of recent market setbacks have fueled the bearish fire in the alt. The drop below the $1,093 level pulled ETH to its January 2021 low.
Now that ETH saw a patterned break, the $1,045 support could ensure a tight phase near the Point of Control (POC, red). At press time, the alt was trading at $1,075.8.
ETH Daily Chart
ETH’s three-month trendline resistance has exhibited a hefty bearish control while the price struggled to find a spot above this line. To top it up, the 20 EMA kept all the bull rallies under a robust check.
Since early April, the bears have held price below the 20 EMA while consistently finding multi-month lows. ETH lost almost 70% of its value from May 5 to June 18. Consequently, the alt is gravitating towards its 17-month low on June 18th.
Should the $1,045 support trigger a near-term buying response, it could delay the ongoing bearish tendencies and propel a squeeze phase near the POC.
Additionally, with the 23.6% Fibonacci level remaining strong, buyers may find it difficult to reverse the $1,097 zone. A drop below the immediate support would expose ETH to a potential retest of the $930 mark. Any bearish invalidation could help the buyers induce a rather short-lived rally to the 38.2% level.
Rationale
The Relative Strength Index (RSI) coincided with the price action to display a one-sided bearish market. As the index plunges near its oversold territory, it could be reasonable to assume a revival from this zone. But the inability to find a close above the 37-mark could encourage the ongoing drawdowns on the chart.
On the other hand, the CMF’s recent growth above the zero line resonated with buying strength. But its reversal of trendline resistance affirmed a bearish divergence with price.
Conclusion
The bulls needed to step in to ramp up the buying volumes at the $1,045 support region to prevent a downside risk of nearly 10%. The alt could see a squeeze near its POC before a volatile break.
However, investors/traders should pay attention to Bitcoin’s movement. Indeed, ETH shares a staggering 99% 30-day correlation with the king coin.
