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Ether price analysis: Is $1,200 the new floor?

By Rakesh Upadhyay


Updated

Ether (ETH)
How is the latest currency market upheaval and The Merge affecting ETH? – Photo: TierneyMJ/Shutterstock

Investors continue to dump risky assets as soaring interest rates and an upheaval in the currency markets increase the risk of a global recession. The S&P 500 (US500) dropped 4.65% while the Nasdaq Composite fell 5.07% last week. 

In comparison, bitcoin (BTC) and ether (ETH) only declined by about 3%, showing outperformance in the near term. Buyers are attempting to keep ETH above $1,300 in the week beginning 26 September 2022.

ETH to USD

In a recent research note seen by CoinDesk, JPMorgan analysts said that the Ethereum blockchain had become less decentralised following The Merge “as [just a] few entities command the majority share of staked ETH”. The analysts also raised concerns that the creation of Ethereum PoW, the new chain born from the hard fork of the blockchain, could divide the Ethereum community.

While analysts debate about the pros and cons of The Merge, Ethereum’s daily token issuance has dropped by about 94% compared to the depreciated proof-of-work (PoW) chain, according to data from ultra sound money. After The Merge, 8,291 ether had been created as of earlier on 26 September 2022, which pales in comparison to the earlier PoW consensus mechanism where 139,283 Ether would have been issued.

Is the post-Merge fall in ether over? Could ether go up? Read the ETH price analysis to find out.

Ether price technical analysis: Weekly chart

Ether weekly price analysis chart, 26 September 2022Ether weekly price analysis chart, 26 September 2022 – Credit: Capital.com

ETH’s price witnessed a small trading range last week, indicating uncertainty among the bulls and the bears. The ETH/USD pair fell 3.01% to finish the week at $1,292.02.

The downsloping 20-week exponential moving average (EMA) and the relative strength index (RSI) in negative territory suggest that bears have the upper hand.

If bulls want to take control, they will have to propel the price above the 20-week EMA. That could open the doors for a possible rally to the psychological level of $2,000. This is an important level to keep an eye on because a break and close above it could signal the start of a new uptrend.

XRP/USD

0.62 Price
+2.390% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.14 Price
-1.670% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

67,793.15 Price
-0.090% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

SOL/USD

180.04 Price
-2.000% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

Contrary to this assumption, if the price turns down from the current level or the 20-week EMA and breaks below $1,200, it will suggest that the sentiment remains negative and traders are selling on rallies. That could increase the likelihood of a drop to $1,000.

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Ether price technical analysis: Daily chart

Ether daily price analysis chart, 26 September 2022Ether daily price analysis chart, 26 September 2022 – Credit: Capital.com

Ether’s price has been declining inside a descending channel pattern for the past several days. The pair bounced off the support line on 22 September and the bulls will now try to push the price above the 20-day EMA

If they succeed, the pair could rise to the 50-day simple moving average (SMA) and thereafter to the resistance line of the channel. This level is likely to attract strong selling by the bears.

If the price turns down from the resistance line, the pair could extend its stay inside the channel for some more time. But if the bulls drive the price above the channel, it could signal a potential trend change.

Another possibility is that the price turns down and breaks below the channel. If that happens, the selling could intensify and the pair may plummet to $1,000.

Ether: Buy or sell this week?

Ether has bounced off the support line of the channel and will now attempt to rise toward the resistance line. Ether’s price analysis suggests a potential trend change on a break above the channel. Conversely, if the price turns down from the 20-day EMA and breaks below the channel, the pair could plummet to $1,000.

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.

Markets in this article

BTC/USD
Bitcoin / USD
67793.15 USD
-62.05 -0.090%
ETH/USD
Ethereum / USD
3457.26 USD
-49.7 -1.420%
US500
US 500
5566.3 USD
59.6 +1.080%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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