Ethereum’s native token (ETH) is showing signs of bottoming as the price of ETH bounced off a key support zone. Notably, the price of ETH is currently holding above a key support level for the 200-week Simple Moving Average (SMA) around $1,196.

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The 200-week SMA support appears to be purely psychological, in part due to its ability to serve as low levels in previous bitcoin bear markets.

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Independent Market Analyst “Blunts” argues that the curved level would also serve as a strong price level for Ether where accumulation is likely.

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He notes:

“BTC bottomed 4 times at 200wma since 2014. [Probably] it’s safe to assume that this is a pretty strong level. Of course, we can skip the wick under it, but there [are] There are also six days left in the week.

Weekly ETH/USD price chart. Source: Trading View

ETH/USD is currently almost 75% below its all-time high, seven months after hitting $4,950.

This massive correction made the Ethereum token an “oversold” asset, according to its Relative Strength (RSI) reading below 30, another technical indicator showing that ETH is “buyable”.

The last time Ether was oversold was in November 2018, which preceded the end of a 12-month bearish cycle when Ether lost 94% of its value.

Unfortunately, the same bearish exhaustion cannot be promised in 2022 as Ethereum continues to face some major macro headwinds.

ETH Technical Bullish Signals Not Enough

Ethereum’s attempt to find a concrete bottom comes amid a selling frenzy taking place in the crypto and traditional financial markets.

At the heart of his 75 percent price correction is a hawkish Fed with its ability to raise interest rates by 175 basis points by the end of September, according to interest rate swaps linked to the FOMC policy results dates.

Change in target interest rates of the Fed. Source: Bloomberg/CME.

In other words, riskier assets will suffer as the cost of lending rises. This could hurt Ethereum’s recovery prospects despite holding above what it calls a “strong” support level.

Ether Price Targets

ETH price is testing the 0.786 Fibonacci line (around $1057) as temporary support. This price level is part of a Fibonacci retracement chart plotted from the $1,323 swing high to the $82 swing low, as shown in the chart below.

Weekly ETH/USD price chart with Fibonacci support/resistance levels. Source: Trading View

A 94% drop in price, just like in 2018, could see ETH approach the 0.236 Fibonacci line around $375, 70% below today’s price.

This key Ethereum price indicator shows that ETH traders are not as bearish as they seem.

Conversely, if Ether does bottom near its 200-week SMA, its path of least resistance appears to be in the $2,000 region. An extended pullback above $2,000 would see the Ethereum token test at $3,500 as the next bullish target.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cryptooshala.com. Every investment and trading step involves risk, you should do your own research when making a decision.