Ethereum is still in a steady downtrend as it bounced off the top of its descending channel on the 1-hour time frame. Applying the Fibonacci extension tool on the latest correction move shows how low price could go from here.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. However, the gap between the moving averages is narrowing to signal weakening bearish momentum and a potential upward crossover.
Stochastic is pointing down to indicate that sellers have the upper hand, though, while RSI is also on its way down. Bearish pressure could be enough to take Ethereum down to the 38.2% extension at $480 or the 50% extension near the swing lows.
Even stronger downside momentum could bring price down to the channel support at the 61.8% extension or $411 or the 76.4% level at $369. The full extension is close to $300 and is already below the bottom of the channel.
The dollar resumed its climb across the board when risk aversion returned on trade war fears. Trump signed a memorandum that could impose tariffs on nearly $60 billion worth of Chinese goods from companies allegedly involved in U.S. intellectual property theft.
China has responded in saying that the country won’t back down if a trade war does happen and warned the U.S. to temper its protectionist stance. Although there’s still a consultation period that would likely see some contentions, higher-yielding and riskier assets like Ethereum already took hits.
Apart from that, reports that Japanese regulators are looking into shutting down Binance operations in the country for failing to get proper licenses also weighed heavily on investor sentiment in the cryptocurrency space. Similar headlines could continue to limit gains and possibly allow the declines to gain traction.
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