Ethereum could be done with its selloff as price is forming an inverse head and shoulders pattern on the 4-hour time frame. Price has yet to test the neckline around $625-650 and break higher to confirm that a reversal will take place.
However, the 100 SMA is still below the longer-term 200 SMA to suggest that the path of least resistance is to the downside. The gap between the moving averages is widening to signal strengthening bearish pressure. The 100 SMA also seems to be holding as dynamic resistance.
RSI is on the move up to indicate that there is some bullish momentum left, but the oscillator is nearing overbought levels to reflect exhaustion. Stochastic has a bit more room to climb, and this might be enough to sustain a move past the neckline resistance.
Cryptocurrencies have made a solid rebound over the past few hours, possibly due to the improvement in overall market sentiment. After all, the political crisis in Italy seems to have been resolved while the meeting between Trump and Kim Jong-Un is set to push through next week.
The dollar has also been on weak footing, despite strong jobs data last week and upbeat ISM non-manufacturing PMI yesterday. This suggests that risk sentiment has been the dominant theme in financial markets, allowing higher-yielding riskier assets like cryptocurrencies to benefit.
There haven’t been much updates on ethereum itself, so it’s likely that the price will simply take cues from bitcoin and other altcoins from here. Any negative developments could still derail the rally and force cryptocurrencies to tumble once more, especially since bulls have yet to gain more traction.
As for the dollar, there are no major reports lined up from the US economy this week so trade-related headlines might be catalysts, along with any factors that could influence expectations for Fed tightening.
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