The price of ether fell to 19-month lows just over $80 today and is now down 94% from its January peak.

Ether's dollar-denominated exchange rate (ETH/USD) slipped to $81.30 at 02:15 UTC – the lowest level since May 2, 2017 – according to CoinDesk's Ethereum Price Index (EPI).

As of writing, ETH is trading at $83.00, representing a 17.8 percent drop on a 24-hour basis. Just three weeks ago, it was teasing a short-term bullish reversal above $200.

That key support (now resistance), however, was breached on Nov. 14, as bitcoin's drop below the crucial support of $6,000 dashed hopes of a major bullish reversal, leading to broad-based risk aversion in the cryptomarkets.

Ether prices have dropped close to 60 percent in the time since and are currently down a staggering 94 percent from the record high of $1,431 hit in January.

So, it is not surprising that bearish sentiment has reached extremes, as seen in the chart below.

ETH/USD shorts at record high

CoinDesk - Unknown

Notably, ETH/USD short positions on cryptocurrency exchange Bitfinex rose to a record high above 340,000 soon before press time – up 183 percent in the last three weeks. Meanwhile, long positions have dropped to the lowest since Sept. 12, as seen in the chart above.

Such extreme positioning is usually a sign of oversold conditions and presages market bottoms. However, calling a bullish reversal with that information alone could prove costly.

The outlook, therefore, remains bearish until a more credible evidence of trend reversal emerges.

Weekly chart

CoinDesk - Unknown

As seen above, ETH created a small doji candle last week, implying bearish exhaustion. That pattern, however, has been invalidated with the drop to 19-month lows.

Moreover, ether has found acceptance below $102.20 (low of the doji candle), meaning the sell-off from $200 has resumed.

The chart also shows that 5- and 10-week simple moving averages (SMAs) are trending south.

As a result of all these bear indicators, ETH may extend the decline toward the next major support lined up at $59.00 (March 2017 low).

We can, though, expect the momentum may weaken somewhat, as the 14-week relative strength index (RSI) is reporting oversold conditions for the first time December 2016.

View

  • ETH may test crucial support at $59.00 (March 2017 low) in the near-term.
  • With oversold readings on the weekly RSI and bearish sentiment at record highs, there is always a risk of a sudden corrective rally. The outlook, however, would turn bullish only if ETH violates the recent bearish lower-high pattern with a daily close above $128.00 (Nov. 28 high).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Ether image via Shutterstock; charts by Trading View

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC