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Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action

Since breaking down from a long-term consolidation pattern, Ethereum (ETH) has struggled to sustain an upward movement and create a bullish structure.

ETH has been falling since reaching an all-time high price of $4,868 in Nov. After bouncing this Jan, the price created a lower high in March (red icon) and has been falling at an accelerated rate since. 

The downward movement has so far led to a low of $1,700 on May 12. 

An important development is that the price has broken down from an ascending parallel channel which had previously been in place since May 2021. A breakdown from such a long-term structure could cause a similarly long-term drop.

Furthermore, the RSI has decreased below 50, in what is considered a sign of a bearish trend.

Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action 3 ETH/USD Chart By TradingView

Mixed readings

The daily chart provides a mixed outlook. On May 8, the price broke down from a descending parallel channel. 

Afterward, it validated it as resistance twice, more specifically on May 31 and June 7 (red icons). 

However, the RSI has generated a bullish divergence (green line), whose trendline is still intact. 

So, while the price action is bearish, the readings from the RSI are bullish. 

Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action 5 ETH/USD Chart By TradingView

A closer look at the six-hour time frame shows that ETH is trading inside a symmetrical triangle. While this is considered a neutral pattern, it is occuring after a downward movement. 

As a result, it is possible that it will lead to the continuation of the downward movement.

Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action 7 ETH/USD Chart By TradingView

ETH wave count analysis

Cryptocurrency trader @TheTradingHubb tweeted a chart of ETH, stating that the price could soon complete wave A of a long-term A-B-C correction.

Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action 9 Source: Twitter

While this is a possibility, it is not yet certain of the A wave is complete. 

If the short-term A:C (white) waves have a 1:1 ratio, this would lead to a low of $876 prior to the reversal. 

Furthermore, the exact shape of the ensuing retracement is not yet determined.

Ethereum (ETH) Generates Bullish Divergence Despite Bearish Price Action 11 ETH/USDT Chart By TradingView

For Be[in]Crypto’s latest bitcoin (BTC) analysisclick here


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