ETH Faces Strong Selling Pressure but Finds Support at $2,000

From Friday to Sunday, ETH experienced an 8% retreat and once again tagged its $2,000 psychological support level.

Today, the price is bouncing back from these lows and has booked a 5.1% gain during the Asian session.

This is the second time that ETH tags the $2,000 support this month. Both times, the price has bounced. However, most traders are questioning how long this threshold can hold as a new week begins.

Macroeconomic headwinds including the Federal Reserve’s reluctance to lower interest rates and Donald Trump’s hostile measures against key commercial partners have weighed on the performance of ETH and other cryptocurrencies.

In addition, industry-specific events like the Bybit hack, which involved the withdrawal of $1.5 billion worth of ETH from a crypto wallet controlled by the exchange have also depressed market sentiment in the past few days.

ETH Could Drop to $1,500 If It Losses This Key Support

Data from CoinGlass shows that $86.7 million worth of ETH have been liquidated in the past 24 hours. This figure could possibly grow exponentially if the price action breaks below the $2,000 level in the next few days.

Meanwhile, trading volumes are up 170% in the past 24 hours with nearly $26 billion worth of ETH exchanging hands during that brief period.

The daily chart shows how momentum has been dropping to lower levels progressively after ETH hit its December post-election peak of $4,120. The asset has made multiple lower highs during this period and it has erased all of the gains it saw as a result of Donald Trump’s ascent to the presidency.

ETH is now entering a critical area of support that will likely determine what will happen in the next few weeks. At this point, ETH needs to stay above the $1,900 level and bounce sharply off those levels to reverse its downtrend.

Otherwise, if the price breaks below that threshold, losses will likely accelerate and downside risks will increase significantly. Right now, a drop to the $1,915 support would result in near-term losses of 9.7%.

However, a break below that mark could push ETH to $1,750 and, ultimately, to $1,500 if the downturn accelerates. This means a downside risk of 29.4% in the near term if the token moves below $1,900.

Momentum indicators favor a bearish outlook as the Relative Strength Index (RSI) shows no signs of a bullish divergence while the MACD is still in negative territory. For ETH to reverse its downtrend, it would have to climb above $2,500 at least in the next few days.

ETH Has Made Four Consecutive Lower Highs Since Sunday

Heading to the hourly chart, we can see that ETH has made three consecutive lower highs since its Sunday peak. This means that the token is on a downtrend. However, momentum indicators are favoring a bullish outlook at the moment in the hourly chart.

The Relative Strength Index (RSI) sent a buy signal late Sunday and we can see how important the $2,000 level has been for the market lately as the price has bounced four times at least above that threshold.

Short-sellers have the upper hand here if they take a short position at current levels and set a stop loss right above the $2,170 level. Another retest of the $2,000 support would result in a short-term gain of 5.5% resulting in a risk-reward ratio of around 1.5.