ETH price technical analysis (27 Sept–3 Oct): Is the correction over?

Ether could signal a trend change above $3,350

Ethereum symbol in the sky as the sun rises over mountains                                 
Will the sun rise for Ethereum prices again following the correction? – Photo: Shutterstock

Institutional investors seem to be gravitating from bitcoin to ether, according to analysts at JPMorgan. The analysts said In a note on 22 September that bitcoin futures traded at a discount to bitcoin’s spot price in September, a sign of weakening demand from institutions.  

According to Markets Insider, the analysts wrote: “This is a setback for bitcoin and a reflection of weak demand by institutional investors that tend to use regulated Chicago Mercantile Exchange (CME) futures contracts to gain exposure to bitcoin.”

In comparison, the 21-day average of ether’s futures premium increased to 1% over ether’s spot price in August on the CME, according to JPMorgan. “This points to much healthier demand for ethereum vs. bitcoin by institutional investors,” the JPMorgan analysts said.

Ether was under constant bear attack last week. First, it came under pressure on fears that a default by the Chinese property developer Evergrande may lead to a widespread contagion. That was followed by a memo from the People’s Bank of China intensifying its ban of cryptocurrencies on 24 September.

Although the price of ether (ETH) dipped below the psychological support at $3,000 during the week, strong buying at lower levels propped it back above $3,000 on 26 September. Is the correction in ether over? Read ether’s price trend analysis to find out.

Ether price technical analysis: weekly chart

ETH weekly price analysis chart
ETH weekly price chart

Ether’s price plummeted below the 20-week exponential moving average (EMA) last week, but bulls bought the dip aggressively, as seen from the long tail on the week’s Doji candlestick. The ETH/USD pair fell 8.06% to end last week at $3,060.75.

Both moving averages are sloping up and the relative strength index (RSI) is in the positive zone, indicating that buyers have the upper hand.

If bulls sustain the price above the psychological mark at $3,000, the pair could gradually attempt to rise to the overhead resistance at $4,000.

However, the bears are likely to have other plans. The sellers will try to pull the price back below the 20-week EMA. If they manage to do that, the pair could slide to the 50-week simple moving average (SMA).

Ether price technical analysis: daily chart

ETH daily price analysis chart
ETH daily price chart

Ether’s price is trading inside a descending channel pattern. The price rebounded off the support line of the channel on 21 September, indicating demand at lower levels. Since then, the pair has been consolidating between $2,737.25 and $3,175.95. 

If bulls drive the price above the range, the pair could attempt to rise above the resistance line of the channel. A close above the channel will be the first sign that the correction could be ending. 

The pair may then rally to $3,677.55 and if bulls drive the price above this resistance, the next stop could be $4,000.

Contrary to this assumption, if the price turns down from the current level, the pair may slide down to the $2,737.25–$2,651.04 support zone. A break below this zone could pull the price to the support line of the channel.

ETH price technical analysis: trading this week

Ether is attempting a recovery, but the bulls will have to push and sustain the price above the resistance line of the channel to signal a possible end to the corrective phase. The pair could then start its northward march to $4,000.

On the downside, the bearish momentum could pick up below $2,651.04.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.

Ethereum to US Dollar
Daily change
Low: 3978.65
High: 4277.85

 Further reading: How to trade ethereum: the ultimate guide

Further reading: What is ether? Your simple guide to the cryptocurrency

Further reading: Bitcoin price analysis (27 September–03 October): Is it time to buy the dip?

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