Disclaimer: The information presented does not constitute financial, investment, trading or any other type of advice and is solely the opinion of the writer.

Ethereum [ETH] has seen some tough times on the price charts in recent weeks. During the hard May 12 market drop, Ethereum had managed to hold the $1750-$1950 support zone. Even as June arrived, the price held onto this demand zone, but buyers were exhausted within a week in June. The altcoin plunged into a crater again a few days ago to drop as low as $881.

The trend favored sellers, and shorting the asset seemed like the safer longer-term trade.

ETH 1-Day Chart

Source: ETH/USDT on TradingView

On the daily timeframe, the downward trend was clearly visible. It featured a series of lower peaks and lower peaks. The last of these lower highs was at $1,284, while the more prominent recent lower high was much higher at $1,920.

Therefore, it can be argued that the long-term trend would remain bearish until ETH can move above $1,920. However, such a large margin of error would be of little help to positional traders.

Interesting development on the daily ETH chart was the formation of a hidden bearish divergence between price and momentum, highlighted in white. While this could continue to develop for a few more days, it was an early sign that the bearish trend was likely to continue. The OBV also chimed in as it collapsed lower to show that selling volume outweighed buying pressure.

ETH – 4 Hour Chart

Source: ETH/USDT on TradingView

Zooming in on the H4 map plotted a series of Fibonacci retracement levels. They showed that the 38.2% retracement level was at $1,278, which was just below the $1,305 resistance and the $1,284 mark.

The confluence of these resistances suggested that ETH bulls would have an extremely difficult time breaking past this resistance zone. At the same time, the $1,175 level has also been significant in the past two weeks.

Therefore, taking a short position below USD 1,175 would be a risky trade. More risk averse traders may want to wait for the hidden bearish divergence to continue on the daily timeframe and try taking short positions in the $1,200-$1,300 area, with a stop loss above $1,305. The previous lows of $880-$900 could be retested and could serve as gains.

Source: ETH/USDT on TradingView

The H4 indicators continued to show neutral momentum behind Ethereum. The RSI has been hovering around the neutral 50 line for the past few days. The OBV struggled to climb past a resistance. On the downside, the CMF managed to slide its way above +0.05. This indicated a strong flow of capital into the market.

The Stochastic RSI also formed a bullish crossover in the oversold territory. All things considered, a slight upward movement would be possible. Still, it probably could not climb past the aforementioned resistance zone at $1,250-$1,305.

Conclusion

Longer term bias for Ethereum remained bearish and buying opportunities were not yet in sight. The four hour chart suggested some indecision in terms of momentum. Therefore, some patience would be required before entering a short position.



This post For the conservative traders of Ethereum, the risk would be to take a short position below…

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