ETH Setting Up for Potential Relief Rally — Price Analysis

  • LTF (Low timeframe) trend: Plenty of signs supporting a small reversal
  • MTF trend: Monster downtrend obtains
  • HTF trend: Trend completely short-circuited & unknown  

In the state of general market collapse – of both cryptos and traditional assets – Ethereum (ETH) may see some respite. But there are no promises in this toxic atmosphere, as crypto’s tight correlation to traditional markets has made itself painfully obvious in the past week.

We start on a 4-hour ETH/Bitcoin chart, and see Ethereum holding pretty well within local and regional support. A bull divergence is showing up on the RSI, and the histogram is arching up in a bullish contraction.

Conditions for a pop?ETH chart by TradingView

We could see this pop soon, depending on what the traditional markets do. Despite many anticipations, crypto is not (yet?) decoupled from traditional markets and the general economic concerns now affecting governments around the globe.

A relief rally is badly needed for Ethereum, in order to reclaim a really important level on the ETH/Bitcoin chart. This is the ‘Capitulation Line’, which was an important level lost in 2019 and recently reclaimed. Retaking this level on a relief rally would likely change the market’s perception of where ETH is headed.

A couple of options for the weekETH chart by TradingView

The worst case scenario is not regaining the capitulation line, nor the 21 EMA which has also been lost at time of writing. If that happens, we could see what remains an overall HTF uptrend versus Bitcoin (incredibly) deteriorate.

Speaking of altcoins versus Bitcoin, we’ve seen a weird spike in altcoin dominance in the past few days. This is weird because we would generally expect altcoin dominance to start falling rapidly, as risk-taking leaves the crypto market.

We should see BTC dominance starting heading up againETH chart by TradingView

It’s possible that this spike was the last gasp of what had been an uptrend in altcoin dominance, amid a confident, pre-COVID market.

We should be on the lookout for an Ethereum pop, and possible stabilization above key Ethereum levels. If we don’t get these, sub-$100 Ethereum will become likely.

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