Ethereum has completed a complex head and shoulders pattern on the 4-hour time frame to signal that the climb is over. Price has yet to break below the neckline support at the 110.00 mark to confirm that a downtrend is in the works.
The 100 SMA is already below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction from here and support is more likely to break than to hold. Price is also below both moving averages as an indication of bearish momentum and the 100 SMA appears to be holding well as dynamic resistance.
RSI appears to be turning higher, though, so there may be some bullish pressure returning. Stochastic is also turning higher but is on middle ground to signal further consolidation. With that, price could keep bobbing up and down above the neckline while waiting for selling pressure to kick in.
A break below the neckline support could spur a downtrend that’s the same height as the chart formation, which spans $110 to $160. A bounce, on the other hand, could spur a rally to the next inflection point at the 200 SMA and right shoulder then at the head.
Ethereum lost momentum on its climb as the hard fork was once again delayed on potential security issues. With that, traders might be keen on liquidating more of their positions and waiting for better prices to buy on dips before the actual upgrade happens.
Still, there’s a lot to look forward to with Constantinople as it features five EIPs that would give a tremendous boost to ethereum functionalities. Until then, though, traders could be on edge and turn to other market clues for direction.