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Thanksgiving Cheer Ends Early for ETH, Price Drops Back to 4k

By:
Joel Frank
Updated: Nov 26, 2021, 09:53 UTC

ETH has reversed back sharply from the nine-day highs seen on Thanksgiving and is on course for its worst losses in two-months this Friday.

Thanksgiving Cheer Ends Early for ETH, Price Drops Back to 4k

Thursday’s Thanksgiving cheer that saw Ethereumm rise over 6% and hit a nine-day high above $4500 appears to have not lasted long. ETH/USD has been under heavy selling pressure on Friday, having seen a sharp correction lower around the time of the 0800GMT European market open amid a sudden pick up in volumes.

According to TradingView, traded volumes between 0800GMT and 0900GMT spiked above 165K, the highest such trading volumes over any one-hour period going all the way back to the 24th of September. The surge in trading volume coincided with a steep drop in ETH/USD to around $4100, a roughly $400 drop from earlier session highs in the $4500 region.

That means Ethereum now trades with losses of close to 10.0% on the day. If the cryptocurrency ends the day at current levels, that would mark its worst one-day performance since the 20th of September.

Key support in $4000 area holding for now

ETH/USD appeared to find resistance in the form of a downtrend that has been capping the price action since the record high was printed at $4867.81 back on the 10th of November.

But dip-buying appetite has for now done a good job in keeping ETH/USD supported above $4000. The psychologically important level has acted over the last few weeks after prices broke above its back on the 20th of October. Prior to that, the level has been acting as resistance.

Perhaps the $4000 can once again act as a floor to enable another push back to record highs, or at least in the short-term back to the top of ETH’s recently established $4000-4500ish range.

If support breaks, sub-$3000 levels are on the cards

However, if the recently established downtrend continues to squeeze the price action ever closer to $4000, prices would form a descending triangle. This pattern is often a signal of an impending bearish breakout.

Should ETH/USD see a sustained break to the south of the $4000 level, aside from some support in the $3600 area, there is precious little to stop prices retracting all the way back ot the September lows on the $2600s. The next key level beyond that is the triple bottom in the $1700s formed during the months of May to July earlier in the year.

But as retail and institutional investor interest in the cryptocurrency space continues to trend higher, it is questionable as to whether the dip-buyers will allow prices to correct that far. Whilst, interest in the search term “ethereum” peaked back in May of this year (when prices surged above $4000 for the first time), interest has remained at historically elevated levels over the past few months.

About the Author

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018. Joel specialises in the coverage of FX, equity, bond, commodity and crypto markets from both a fundamental and technical perspective.

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