The cryptocurrency is on a solid downtrend that started on September 16th; since then, the pair has lost 21.5% in eight trading sessions. The price broke two crucial support levels at the 61.8% and 50% Fibonacci retracements of 3,354.15 and 3,040.32, respectively.
The price could continue falling to the next support level at 2,724; then it could bounce back as the Relative strength index will be very low at that point, probably oversold, which would naturally drive the price back up at least for the short term.
If the price breaks that support level, we would expect the downtrend to continue even at an oversold status, but we do not think this is very likely; based on past performance, we rarely see Ethereum stay oversold for long periods.
The Bollinger bands are open, which will bring high volatility; the price trades closer to the lower band, suggesting that it is relatively low, another reason we think the price will find support and recover in the short term.
The relative strength index is currently at 36%, where it does not have much room to continue falling, although we could see it closer to 30% before the recovery starts.
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