Why This Trader Thinks Ethereum Could Plunge 20% Despite $400 Break
- Both Bitcoin and Ethereum have pushed higher after the local lows on Thursday.
- Both digital assets are up around 5% from those lows, with BTC pushing to $11,600 and ETH to $400.
- This move brings Ethereum, especially, above the pivotal $400 resistance.
- $400 is a technical level and a psychological level, with the last break above this level in mid-August triggering a 10% rally.
- One trader thinks that ETH could plunge 20% in the near future despite the recent strength.
- Here’s why he thinks so.
Ethereum Could Plunge 20% Towards $320: Analyst Explains
Ethereum is preparing to fall from the $405 highs towards $320 according to a cryptocurrency analyst. The analyst in question shared the chart below on August 28th, noting that he thinks ETH could be primed to move from $405 to $320, which would mark a drop of 20%.
As to why this drop may be had, he cites how $405 is the “cleanest” short setup for him, where a move above that level would represent a continuation of the uptrend while the failure could signal a bearish reversal.
In his words:
“If you ask “why?” $405 represents the cleanest set up with the best stopping point for me to believe that the correction is over and the uptrend resumes. It’s simply the line in the sand for my set ups, below, short favoured, above, we resume upside movement. Good movement on $ETH right up into $405. Somewhere around here is the major decision point for me.”
Chart of ETH's price action over the past few weeks with analysis by crypto trader Cold Blooded Shiller (@Coldbloodshill on Twitter). Chart from TradingView.com
He did note, however, the other altcoins are looking relatively strong compared to Ethereum. This may suggest that altcoins are poised to undergo another leg higher rather than reversing lower:
“The only other thought I have is that the rest of the market (alts) look in great shape and many have completed S/R flips over the course of the night and morning. Perhaps $ETH will show the strength, but that’s what stops are for hey?”
Bitcoin Will Decide ETH’s Fate
Bitcoin is likely to decide ETH’s fate in the near term, though.
Fortunately for Ethereum bulls, the leading cryptocurrency is poised to move higher. One analyst shared the chart below just a day ago, noting that there are three signs showing that BTC will move higher after the $1,000 correction: the “buy 9” as per the Tom Demark Sequential, a bullish crossover in the Stoch RSI, and an uptrending MACD.
There are also other fundamental trends, like Fidelity Investments’ Bitcoin fund and ongoing money printing, set to bring BTC and Ethereum higher.
Chart of BTC's recent price action with analysis by crypto trader CryptoHamster (@CryptoHamsterIO on Twitter). Chart from TradingView.com.
Featured Image from Shutterstock Price tags: ethusd, ethbtc Charts from TradingView.com Why This Trader Thinks Ethereum Could Plunge 20% Despite $400 Break