ETH price risks 20% drop if key support level breaks

Ether’s (ETH) rally versus Bitcoin (BTC) isn’t solely exhibiting indicators of exhaustion however can also be in peril of breaking beneath a key technical support level. 

ETH slides vs. BTC within the second half of January

The ETH/BTC pair declined practically 9.25% on Jan. 24 from its native prime of 0.0779 BTC established on Jan. 11. Since the beginning of the yr, Bitcoin has been barely outpacing Ether when it comes to United States {dollars}, rising 38% versus 35%, respectively.

Interestingly, Ether’s pullback versus Bitcoin has landed its price on the backside of its EMA ribbon vary, as proven beneath.

The EMA ribbon indicator reveals quite a few exponential shifting averages of accelerating timeframe on the identical price chart. Dropping beneath the ribbon vary will increase an asset’s probability of seeing an prolonged down-move.

In different phrases, breaking decrease would improve its risk of declining by greater than 20% from its present price ranges.

Conversely, rising above the ribbon vary raises the asset’s possibilities of a broader rally.

Ether’s price capped by key descending trendline

This week, ETH/BTC dropped to the 55-week exponential shifting common (the pink wave) — a backside wave — of its EMA ribbon indicator, as proven beneath. Buyers took management close to the 55-week EMA, prompting Ether to recuperate a mere 0.35% versus Bitcoin to 0.0708 BTC on Jan. 24.

Related: This $25K BTC price goal would spell distress for Bitcoin shorters

But now, the probability of retesting the EMA ribbon backside is excessive attributable to a multi-month descending trendline resistance (black trendline within the chart beneath), the place sellers have been extra lively as of late.

Therefore, one can’t rule out the potential of ETH/BTC breaking beneath the EMA ribbon vary, much like how the pair did in May 2022 within the wake of the Terra collapse.

Back then, Ether fell by over 25% versus Bitcoin to 0.0490, a level coinciding with its 200-week EMA (the blue wave). 

Therefore, if an analogous breakdown happens within the coming weeks, the ETH/BTC pair could take a look at the 200-week EMA close to 0.0550 BTC as its main draw back goal, or roughly a 20% price drop from present ranges. 

This article doesn’t include funding recommendation or suggestions. Every funding and buying and selling transfer entails danger, and readers ought to conduct their very own analysis when making a call.