So Ethereum (ETH) had a nice big bounce today. I am sure many hodlers and traders were relieved. Though the latter probably had more fun than the former since today’s move really didn’t signify much in terms of a recovery.
From the 3 month chart, we can see Ethereum’s price hasn’t even passed the 8 day exponential moving average. So basically the price had such a hard sell off that traders took advantage of the extension and bought into the bounce. The bounce was sweet. We’re talking from 167 to 204-ish as of the time of this writing.
A recovery of the 8-day would be a nice start to a trend reversal. If it can hold the 8-day, the next test would be 260 or so. This would show some strength and a sign of conviction from buyers. What we don’t want to see happen is consolidation in the range of 170 – 260. This might prep it for another leg lower.
If you look back to around May of this year, you can see that exact pattern play out. Ethereum hit a downtrend in early May which lasted until end of June. Afterwards, we consolidated from 420 – 511 until we hit this most recent downtrend at the end of July. So, could the new range be 170 to 260? Who knows, only price action and time will tell. Still, for traders, that’s not a bad range.