Ethereum recently broke to the upside of its descending trend line on the daily time frame, signaling that a reversal from the downtrend is underway.
However, price hit a roadblock around $160 and is in the middle of a pullback from the rally. Applying the Fibonacci retracement tool shows the next potential support levels where buyers might be waiting.
The 61.8% level is close to the broken trend line and may be the line in the sand for a pullback. This is also around the 100 SMA dynamic inflection point that adds to its strength as a floor.
On the subject of moving averages, the 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Then again, price is already above the 100 SMA as an early indicator of bullish pressure.
RSI is heading lower and has some ground to cover before indicating oversold conditions. This means that sellers could stay on top of their game and could keep pushing for declines until overdone. Similarly stochastic is heading south so ethereum could follow suit while sellers have the upper hand.
The downturn in sentiment is being pinned as the main factor that spurred the latest drop as traders keep holding out for positive catalysts to sustain any rallies. By the looks of it, buyers are still being cautious and are easily spooked by technical level breaks.
Still, some maintain that the drop was merely a short-term correction after the latest rallies that signaled a possible bottom in prices. It remains to be seen whether there will be actual developments that could give the reversal more traction from here.