Ethereum has seen some sharp downtrends against Bitcoin (BTC) in the past. The daily chart for ETH/BTC shows one such downtrend between June and August this year. While that was a brutal downtrend, we have reasons to believe the next downtrend could be a lot more brutal. ETH/BTC is currently trading within a descending broadening wedge. Now that it has tested the top of this wedge, there is a lot of room for it to decline to the bottom of the wedge. RSI on the daily time frame shows a strong rejection at a trend line support turned resistance. The Stochastic RSI is also a lot more overbought than it was during June.
The altcoin market has not seen any real pain just yet. We have seen some ICO scams for some ‘blockchain projects’ go belly up but we have yet to see a thorough cleansing of this market. The next decline would create optimum conditions for such a cleansing in the market as not just Ethereum (ETH) but a lot of other cryptocurrencies would be in a downtrend against Bitcoin (BTC) for a long time. We would still want to see a retest of the 200 day moving average on pairs like ETH/BTC before the major downtrend but at this point we could certainly see the pair decline first towards the 38.2% fib extension level and then the 61.8% if that doesn’t hold.
The daily chart for ETH/USD shows that the price has faced multiple rejections at a key trend line resistance. Until and unless we have a break past this trend line resistance, there is not much to be bullish about. The most painful scenario for ETH/USD would be if the price declines down to the 61.8%,