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The Ethereum price is currently forming a bearish divergence on the 1-hour timeframe. This divergence is a strong indication of a rapidly declining support for the ETH bullish rally we are currently experiencing on the 1-hour timeframe.
What Is A Bearish Divergence and How Is It Formed?
Bearish Divergence shows weakness in price. The bearish divergence is caused when the price is moving higher while the MACD indicator keeps on moving lower. Once this happens, it signifies that the asset might be weak and ready to sell off.
Right now, the Ethereum price is rallying higher, but the MACD indicator is showing a clear sign of a downtrend.
This tells us that “while the price might be moving up, bullish volume is dying down” so sooner or later the price will reverse.
In this Ethereum analysis, we will be talking about this bearish outlook for ETH and the key resistance the price is about to smash on the 1-hour timeframe.
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Ethereum Diverging At Key Level
The Ethereum bearish divergence is coming at a time when the price is approaching a key resistance level on the 1-hour timeframe. This key level is the resistance of the Ascending Channel Pattern the Ethereum price is currently trading in.
This Ascending Channel pattern resistance has held the Ethereum price back before and might do so again in the coming days, the bearish divergence we are currently witnessing only creates a price confluence and increases the chances for us to see that Ethereum sell-off occur.
What To Expect In The Coming Days!
In the coming days, we are expecting to see this resistance level on the 1-hour timeframe hold! And when you combine this level with the current divergence playing out on Ethereum, there is a very high probability we might see a massive sell-off from there.
This sell-off could easily push the prices back down to the base of the channel, where we have seen support come into play over and over again in the past.
A sell-off like this would likely push the value of Ethereum below -8% in the coming days and offer a great shorting option for short-term traders.
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