Ethereum dipped to its lowest in more than a year. As at the time of writing, Ether’s low for 2022 is $900. However, the coin saw notable price increases that resulted in a peak above $1,090.
It has held on to the $1,000 support for more than three days before finally relinquishing the level. The bears made their first successful attempt at the mark this morning that ensured a dip to $980.
However, the coin saw a significant buyback that saw it surge above $1,000. Nonetheless, there has been speculation of how low the largest alt dip will be. One is a retracement to $500. Does the chart agree? We will be looking at some indicators. The first is the Relative Strength Index.
Ethereum is Oversold
It is no news that ether is currently oversold. Nonetheless, there may be light at the end of the tunnel. The rules surrounding this metric state that an oversold asset is bound for rebound or buyback. We may conclude that the same will play out in the present situation. When will it happen and at what price?
It is important to note that a similar scenario to the present, has taken place in 2018. Although price actions may play out the exact way, nonetheless, we may draw insight from that event.
One similarity between the both times is how low the Relative Strength Index fell. It dipped below 20 and stopped at 17. From the moment ether became oversold, to the time it experienced buyback, it lost more than 40%.
Applying the same measurement to the current bear market, we may conclude with a measure of certainty that ETH is going to retrace to three figures before the end of the current cycle.
Ether became oversold at $1,660. A repeat of the 2018 event may send the coin as low as $800 and possibly lower as there is presently huge FUD since the drop below $1,000. The second largest alt Fear and Greed Index is a clear indication of the impending correction as it is at its lowest ever.
There are other indications that the bearish grip may conclude till the of this month.
June is the Second Most Bearish Period for Ether
The image below is a monthly heatmap for the largest alt. A closer look at the figures shows us that June is not one of the most favorable months for ether. Of the six Junes that have passed, only two came out positive.
Ethereum gained 20.8% (its highest increase) in 2017 and lost 21% (the largest deficit) the next year. On average, the coin records losses of more than 5% during the period under consideration.
The current may offer more in terms of volatility and the largest alt may record an even bigger loss. Nonetheless, ether is down by more than 50%.
Key Levels to Watch
Based on support, it is hard to predict the level at which the downtrend will halt as there is no strong barrier in view. From previous price movements, we observed that a few rebounds have happened around $900.
Nonetheless, the mark is not one of the toughest. Once it fails, the next level to watch out for is the $800. A lot more buybacks have taken place around it which makes it a stronger bullish obstacle.
However, it is not one level to bank on. $600 have had more times as support than the previously highlighted levels. Once it fails, there may be no rebound until $400. It may be one of the few levels to bank on as soon as the higher ones fail. Ether has enjoyed more price movement around it.