Key Takeaways
- Ether fell sharply early Friday to trade near a two-month low amid fears of new Bitcoins flooding the market from defunct Japanese exchange Mt. Gox and rising long position liquidations.
- Ether’s price broke beneath the closely watched 200-day moving average on Thursday, with falls temporarily accelerating below support at $2,900 early Friday,
- Ether may encounter buying interest at chart levels near $2,600, $2,150, and $1,950.
- Amid a recovery, Ether may face overhead selling pressure around the prominent March and May peaks that sit at $4,094 and $3,974, respectively.
Ether (ETH), the world’s second largest cryptocurrency by market capitalization, fell sharply early Friday to trade near a two-month low, participating in a broad-based sell-off across the asset class sparked by fears the market could soon be flooded with additional Bitcoins from defunct Japanese exchange Mt. Gox.
Moreover, selling has intensified due to Ether long position liquidations tallying nearly $180 million over the past two days, according to data from analytics site Coinglass, the highest two-day period of forced sales since mid-April.
Below, we take a closer look at the Ether chart and use technical analysis to identify important price levels to look out for amid further weakness.
Breakdown From Rangebound Conditions
Since topping out in early March, Ether has remained mostly rangebound between $3,900 and $2,900 to establish key support and resistance levels. However, the cryptocurrency broke beneath the closely watched 200-day moving average on Thursday, with falls temporarily accelerating below $2,900 Friday morning,
Monitor These Levels Amid Oversold Conditions
While the relative strength index (RSI) confirms the recent bearish price momentum with a reading below 30, the deeply oversold conditions also increase the likelihood of a short-term bounce at key chart levels that we’ll discuss below.
The first area to watch sits around $2,600, a region that may provide support near a peak in January that formed part of the cryptocurrency’s broader uptrend between October and March.
A close beneath this level could see Ether fall to the $2,150 area, where a horizontal line connects a series of prices from November to early January.
A deeper retracement in the asset class could trigger a decline below the key $2k psychological level to $1,950, where buyers would likely emerge near a horizontal line extending from April to November last year.
Levels To Watch Upon Ether Recovery
Amid a recovery in Ether’s price, it’s worth keeping an eye of the prominent March and May peaks that sit at $4,094 and $3,974, respectively, both areas on the chart where the cryptocurrency could face overhead selling pressure.
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