To understand how this could occur, it is essential to understand the function of the trendline support. In technical analysis, the trendline support level acts as the floor or safety net for an asset’s price, preventing it from falling further.
Source: Currently, is precariously perched on this threshold. If this support line breaks, it is a strong indication that selling pressure has surpassed buying pressure, potentially triggering a sharp drop in price to the next support level, which, for Ethereum, stands at $1,380.
In normal market circumstances, a spike in trading volume often accompanies a significant price move. High trading volume can indicate strong investor interest and validate a price move in either direction. It is an essential element that often hints at an upcoming volatile move for a digital asset. However, Ethereum is currently experiencing the opposite scenario. Without a significant volume spike, the current trendline support test raises concerns.
Despite the apparent gloom and doom of this scenario, the silver lining lies in the concept of market correction. Corrections are generally seen as healthy for the market in the long term, shaking out weak hands and potentially setting the stage for future growth. If Ethereum does fall to $1,380, it could potentially attract more buyers at a more attractive price point. This influx of buying pressure can then serve as the springboard for Ethereum’s price to bounce back.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
