Last week Ethereum was still in a bullish flag. We had noticed a trend line developing within the flag and pointed that the price action around that line in the next days will either support the price and lead to a breakout to the upside or become a resistance and quickly send the price to the next support level. We identified the $200 as the next support level.
As of today, we can see that the price fell off the Bull flag and is bouncing between $212 and $175. Some media outlets are already talking about how the Cryptocurrencies’ bubble bursting.
So is the Cryptocurrency Bubble really bursting? What’s next for Ethereum?
At this point we believe such a statement is premature. One needs to understand that Cryptocurrencies are extremely volatile and their retraces could be rather brutal. Healthy pullbacks but nerve racking nonetheless for most traders. In our opinion, we are looking at 3 potential scenarios in the next few days, 2 being Bullish and 1 Bearish:
- Ethereum’s price to reclaim the $200 as a support in the next 24 to 48hrs and consolidate before resuming its Bullish trend.
- The $200 level failing and the price bouncing off the 2nd support level at $150, consolidating and resuming its Bullish trend once the $200 level is reclaimed as support.
- The $150 level failing as a support and Ethereum’s price officially Breaking down.
The chart below illustrates the support levels mentioned above along with the most up to date price action:
Therefore, we believe it’s still possible for Ethereum to resume it’s bullish trend after a healthy pullback provided it reclaims the $200 support level. If that happen, we won’t be surprised to see another leg up similar to the one that started end of May when Ethereum’s price went from $150 to $400. Should this happen, we will be looking at a backtest of the breakout level.