Ethereum Attempts Recovery After Reaching Oversold Conditions

    • ETH declined below the $2,250 amidst the market-wide bloodbath.
    • Ether hits nine-month lows, increasing the probability of a further downside.
    • Technical analysis identifies key bearish trend formations, forecasting a further decline.

    Ethereum’s native token ETH traded below $2,250 late on Monday amid continued turmoil in the crypto market. According to data from TradingView, the smart-contracts token fell to $2,198 before posting a recovery. At the time of writing, Ether was trading at $2,404.

    As reported earlier, Terra’s algorithmic stablecoin UST incurred significant losses, falling as much as 38% between May 9 and 10 on Coinbase against USD. At the time of writing, UST was exchanging hands at roughly $0.88, after hitting a low of $0.61.

    As a result, the Luna Foundation Guard liquidated its Bitcoin reserve to save UST, leading to Bitcoin’s 10% drop to trade below $30,000. Ether and other cryptos followed suit with the largest altcoin dropping to nine-month lows. ETH is currently sealed in a downtrend, and analysts believe the price could move further south.

    ETH Bulls Attempt A Recovery

    Ether broke below the ascending trendline on May 7. This move invalidated the ascending triangle pattern that had been in development since January 2022. The breakdown of a bullish pattern is usually a negative sign.

    ETH/USD Daily Chart

    TradingView Chart: ETH/USD

    Strong selling pulled the token below the support at $2,250, as per an earlier analysis by Vauld Insights. Bulls have since reclaimed this crucial level and were now attempting to push the price above the $2,500 psychological level.

    If they succeed, ETH would make an attempt to push the pair above the uptrend line at $2,711. Such a move will suggest that the bears may be losing their grip. The crypto could then rally to the 100-day Simple Moving Average (SMA) at $2,917 and later the 50-day SMA at $3,031.

    Alternatively, continued selling may pull the price below the immediate support at $2,250. If this happens, it would open the door for a possible drop to the critical support zone around $2,000. The buyers are likely to aggressively defend this zone because a break below it could sink ETH to $1,750.

    Nancy Lubale
    Nancy is a cryptocurrency analyst and researcher. Her interests are in cryptoasset research, Fintech, Blockchain, DeFi, DAO and NFT sectors.

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