Despite the Ethereum trend continuing to push prices lower, the bearish volume supporting this move down has continued to decline and dry up rapidly.
This drying volume is creating a massive divergence between the ETH price and the MACD indicator in the Daily timeframe. This MACD indicator helps us track the momentum of buyers or sellers entering the market to support a move.
And as we can clearly see, the amount of sellers entering the market to support this ETH price push lower has been declining and is still declining rapidly.
This bullish divergence can help us better understand the shifting sentiment of Ethereum traders from bearish to bullish in the longer-term timeframe.
In this Ethereum analysis, we will be breaking down what we think might happen next and the key levels we want to keep our eyes on in the coming days.
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Is The Ethereum Sell-Off Over Extended?
The Ethereum price reached ATHs and started selling off since November of last year 2021. And that has sell-off has continued all through 2022 with just a few weeks of price consolidation along the way.
With how long this bearish trend has lasted, it is fair to say that the Ethereum sell-off might be over extended as we speak.
But it being over extended does not mean the price will just automatically stop and reverse immediately, the truth be told, we don’t know how much longer it could move lower but what we do know is its move lower is very limited, so entering a sell trade at this current prices might be risky
What Should We Expect Next?
The MACD indicator might be screaming that the Ethereum move lower is overextend. However, we will stand aside until we start seeing price conslidations and push to the upside.
Entering any buy trades at this point with little to no bullish confirmation except the MACD indicator is like catching a falling knife. So in the coming days we will be waiting to see the Ethereum price gradually slow down and begin to trade sideways before we can start looking for a buy entry.
We believe the Ethereum sell-off to the downside might be overextended and can’t move much lower. However, we want to see the Altcoin price slow down and begin to consolidate in order to confirm this bearish exhaustion.
Until we see this consolidation and a potential bullish pattern indicating a price break back to the upside, we will stand aside and wait
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