ETHXBT Price Technical Analysis: New Channel Forming

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ETHXBT recently broke below an ascending channel pattern visible on its 1-hour chart. Price is now starting to form a new descending channel to indicate that the reversal is gaining traction.

Price is currently testing the channel resistance and might be due for a move back down to the support at 0.01500. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the selloff is more likely to continue than to reverse. Also, the moving averages are holding as dynamic resistance levels for now.

RSI is turning lower to indicate that sellers are in control of price action and have enough energy left before the drop is overdone. Similarly, stochastic is heading south and ETHXBT price could follow suit. If bearish pressure is strong enough, price could even break below the short-term channel support and establish a steeper decline.

On the longer-term charts, ETHXBT is on a steady downtrend and has just recently bounced off the 38.2% Fibonacci retracement level on the latest pullback. It is also moving below a descending trend line on the daily time frame.

Demand for bitcoin has recovered when news of China’s crackdown on bitcoin exchanges and clients has died down. However, the government is still carrying on with its efforts to investigate and curb offshore investment so traders are wary that authorities could introduce more restrictions anytime soon. If so, this would severely curtail bitcoin activity in its largest market, thereby resulting to yet another wave lower for the cryptocurrency.

The Chinese central bank has recently released results of its investigations and has found irregularities in the operations of major bitcoin exchanges BTCC, Huobi and OKCoin. However, officials have stopped short of announcing any punishments on these exchanges even though they were judged to be operating against anti-money laundering rules. Experts have downplayed these findings but the investing public remains wary of potential repercussions on these firms.

Still, uncertainty in the global markets is encouraging traders to seek higher returns in bitcoin versus stocks or fiat currencies. Another event risk is approaching in the form of Trump’s inauguration and additional volatility is expected, possibly leading to some profit-taking in the markets and a flight to safety. In instances like these, bitcoin usually benefits and is the preferred digital currency compared to ethereum.

In other bitcoin news, Nigeria’s central bank has warned against the use of the cryptocurrency while Coinbase has recently secured BitLicense in New York. These represent opposing forces on the cryptocurrency but the latter could carry more weight, as this would encourage more transactions.

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With an upbringing rooted in deep ethical values, Yashu Gola knows how to put honesty and dedication into his articles. This young and dynamic financial analyst has done his graduation in IT engineering. His interests in financial writing have once brought him to our digital doorsteps. Since then, he has been an integral part of ForexMinute.com and writes the most captivating news-articles on the foreign exchange industry, cryptocurrencies, and medical marijuana trading.