Ether Nurses China Hangover as Price Struggles Above $300
The price of ether continues to struggle following news the world's largest market will no longer support perhaps the platform's biggest use case.
Cryptocurrencies appear to be regaining poise following last week's news from China, with the ether-US dollar exchange rate (ETH/USD) rising to a four-day high of $316.73 today.
Such a move might first appear like a rebound. The digital currency fell to a low of $291 on Friday and extended losses to $276 over the weekend on both China's formal ICO ban, as well as its rumored, but unconfirmed, ban on exchange trading.
Despite the recovery, however, there are signs ether is still feeling the heat of both moves.
While ether climbed above $300, weak volumes would suggest the move lacks substance. All in all, the cryptocurrency is having a tough time scoring big gains above $300.
China's crackdown on ICOs may be bad for the market, but it's worse for ethereum, as its blockchain serves as a platform for new token creation.
As per CoinMarketCap, ethereum has gained 3.11% in the last 24 hours. At press time, the digital currency traded at $302 levels. Week-on-week, the ETH/USD pair is down 4.4%. On a monthly basis, ETH is up just 3%.
Daily chart - Recovery lacks substance, Potential Head & Shoulders reversal
The chart above shows highest volume was seen on September 9, when prices dropped from $350 to $275.
Since then, an anemic recovery has been seen in prices, while volumes have steadily dropped. Thus, the recovery from the low of $275 lacks substance, i.e. an absence of fresh buyers means the recovery could be a product of profit taking on the shorts.
Head and Shoulders is a chart formation that predicts a bullish-to-bearish trend reversal. It works best when formed at the top of the uptrend as is the case with ether. A break below the neckline [line drawn from two lows] marks a trend reversal.
A nice topping pattern could be unfolding on the daily chart - The breach of rising trend line followed by a completion of the head and shoulders pattern.
The 5-day moving average and the 10-day moving average is sloping downwards and did cap the upside in prices today. The downward sloping moving averages suggest potential for another dip in prices.
- Ether's recovery is likely to be short lived. Prices could revisit $275-$266 levels. An end of the day close below $266 would indicate the rally from the low of $136 has ended.
- On the higher side, only a break above $338.66 [Sep 7 high] would revive the bullish view.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
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