Ethereum: Traders can take short positions here with a stop-loss at or just above…

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Bitcoin continued to trade within a range from $28.7k to $30.6k, while much of the rest of the altcoin market was in a downtrend. Ethereum managed to stave the bears off in the past two weeks after a strong move down from the $3000 level earlier in May. Over the previous day, the sellers seized the initiative and forced ETH beneath a support level of $1960.

The market structure for Ethereum on the lower timeframe charts was bearish and pointed toward further losses.

ETH- 1 Hour Chart

Source: ETH/USDT on TradingView

On the lower timeframes such as hourly, Ethereum appeared to form a range between $1900 and $2120. However, over the past week, sellers were able to force the bulls to retreat even at the $2080 and $2060 levels. This suggested that buying pressure had dried up somewhat.

The Visible Range Volume Profile showed the Value Area Highs and Lows (gray) to lie at $2242 and $1733, with the Point of Control at $1967. This level was the most important level of support for bulls to hold on to, and it had confluence with a longer-term horizontal support level at $1963. However, over the past couple of days, bears have gathered enough strength to force the price beneath this support area.

The $1750-$1950 (highlighted in cyan) has been a zone of demand from July 2021, and the price has dropped as far south as $1710 to test a support level as well. Therefore, in the short-term, a bounce to $1800-$1840 could occur, followed by another move downward.

Rationale

Source: ETH/USDT on TradingView

The RSI showed a bullish divergence (orange) where the price made lower lows while the momentum indicator made higher lows. This bullish divergence hinted at a pullback toward $1840, but the trend remains bearish. A hidden bearish divergence can be used to signal a continuation of the former downtrend.

The OBV slipped beneath support it has held since 13 May, and this meant that selling volume has been dominant. The CMF dropped below -0.05 once again to show heavy capital flow out of the market.

Conclusion

The bullish divergence meant a bounce was imminent, and the $1800-$1840 area could be a place to enter short positions with a stop-loss at or just above the $1950 mark. To the south, $1710 and $1555 are support levels that ETH is likely to descend to in the coming days.