ETH price analysis for May 12-17: fall in Ether could be a bear trap
The coin is in a no-trade zone at the current levels. Traders can wait for it to show strength to initiate long positions
Ethereum co-founder Vitalik Buterin believes that the current crisis due to the coronavirus pandemic has generated a lack of trust and understanding among the countries. According to him, this opens the need for a network like Ethereum to play a “kind of neutral global player role [for] these systems, currencies, and applications to interact. I think anything created and maintained by nation states can’t play that role.”
The majority of the 0'>Ether holders plan to stake their coins when the much-awaited ETH 2.0 goes live in the future, according to a report by blockchain technology firm, ConsenSys. About 20 per cent of the participants plan to stake between 91 per cent to 100 per cent of their portfolio to earn steady returns. The crypto investors are excited about ETH 2.0, hence, any sharp dips are likely to be purchased aggressively by the long-term investors.
Let’s do the 0'>Ether price technical analysis of both the weekly and the daily chart to spot the critical levels to watch out for in the short-term.
ETH price technical analysis: weekly chart
After staying in the green for six successive weeks, Ether ended last week with a loss of 10.64 per cent. Both moving averages are flat and the RSI is also close to the 50 levels, which suggests a balance between supply and demand.
If the price dips and sustains below the 20-week EMA, the advantage will shift in favour of the bears. The next level to watch on the downside would be $148 (£120, €136) and then $120.
Conversely, if the bulls manage to keep the price above the 20-day EMA, a few days of range-bound action is possible. The trend will turn in favour of the bulls if the price bounces off the moving averages and rallies above $227.63. In such a case, a move to $250 is possible.
The 0'>Ether price analysis of the weekly chart points to a possible consolidation for the next few days. Let’s see if we can spot any setups on the daily chart.
ETH price technical analysis: daily chart
Ether broke below the support line of the ascending channel on May 10 and 11 but the bears have not been able to capitalise on the breakdown. This suggests that the bulls are buying the dips to the 50-day SMA.
However, with the fall, the 20-day EMA has started to slope down and the RSI has dipped below the 50 levels, which suggests that the bears are attempting to make a comeback.
A break below the 50-day SMA will suggest weakness and could result in a drop to $148 and then to $120. Conversely, if the bulls defend the 50-day SMA and push the ETH to USD pair back into the ascending channel, it will signal strength.
If the pair sustains inside the channel, it is likely to rally to the $217.01-$227.63 resistance zone. Above this zone, the rally can extend to the resistance line of the channel.
The Ether price analysis of the daily chart suggests that the pair is at a critical juncture: if it can climb back into the channel, it will signal an advantage to the bulls; on the other hand, a break below the 50-day SMA will suggest that a deeper correction is likely.
What are the possible trade setups this week?
Traders can wait for Ether to climb and close (UTC time) inside the ascending channel before buying it. The stop-loss can be placed just below the 50-day SMA. As the price moves up, traders can trail the stops higher. Long positions can be avoided if the price turns down and breaks below the 50-day SMA.
FURTHER READING: Ether and Ethereum: what is the difference?
FURTHER READING: What is the Ethereum market cap, and will it grow in 2020?