Like bitcoin at the close of March, ethereum’s ether token has been hit with a “death cross” indicator today.
The scary-sounding death cross occurs when the 50-day moving average (MA) crosses the 200-day MA from above.
However, it’s worth noting that the 200-day MA includes almost one-year-old data, while the 50-day MA marks data that goes back close to three months. So, such events tend to lag the trend by at least three months.
For instance, ether (ETH) topped out at a record high of $1,424 on Jan. 13, according to Bitfinex data. As of writing, ether is changing hands at $399 on Bitfinex – down 72 percent from the all-time high. So, the sell-off has already taken place and today’s death cross effectively indicates the bear market is three months old.
Hence, it should come as no surprise if ether bottoms out now the death cross has been confirmed. Further, it’s likely no coincidence that the sell-off ran out of steam around $360 just a few days ago.
ETH attempted to form a double bottom breakout on Monday, having formed a base around $360 since the end of March. However, the influence of a sell-off in bitcoin made sure the cryptocurrency closed (as per UTC) well below the neckline resistance of $418.
ETH has also formed a doji candle at the neckline hurdle, indicating indecision in the marketplace.
Nevertheless, the relative strength index has cleared the descending trendline hurdle and has risen from the oversold territory (to back above 30.00), suggesting scope for a double-bottom breakout.
A close above $418 (neckline hurdle) would confirm a double-bottom breakout (short-term bullish reversal) and open the doors for a rally to $475.
Bearish case: A close below $358, if accompanied by a BTC sell-off, could yield a drop to $300.