Ethereum ETH price has not recovered the relative strength that dominated the April-May period, but the response to the largest weekly drop of 41.44% has been constructive. Until ETH price can gain sustainable traction above the 50-day SMA, Ethereum will be clouded with investor skepticism.
Ethereum ETH rallied just over 50% from the May 19 low at a price of $1,900 before printing a new correction low on May 23. The new correction was followed by a 70% bounce at the May 26 high. A bullish hammer candlestick pattern on the 12-hour ETH chart initiated the rebound on May 23, and it was accompanied by above-average volume after reaching an oversold reading on the daily Relative Strength Index. Moreover, the May 23 undercut of the May 19 low has put ETH price in place for a double bottom pattern level with a trigger price of $3,000.
The consecutive quick price rebounds have frustrated any bearish narrative and have built up price compression that needs to be released by removing the weak ETH holders through price pullbacks, such as today. Once complete, the Ethereum price will be unfettered to test the double bottom trigger price.
A breakout above the double bottom will quickly discover a resistance level at the 61.8% Fibonacci retracement of the May decline at a price of $3,369. If the rally continues, Ethereum will be introduced to minor resistance at the 78.6% retracement level at $3,815 before launching an assault on the all-time high at $4,384.
An aggressive renewal of selling pressure in the cryptocurrency complex may derail the relatively positive outlook for Ethereum price. The most crucial support level is the February 20 high at $2,042, an ETH price that has been resistant and support in April and May on an intra-day and closing basis.
If selling pressure does not halt, the May 23 low will offer a modest support level, but the vital level is the strategically important 200-day SMA at a price of $1,638. It should motivate prominent investors and institutions to begin accumulating in size.
Conveying a bullish message for Ethereum ETH price is the Santiment Market Value Realized Value metric. The current metric reading is negative despite the 70% bounce back in ETH, indicating that the smart contracts giant remains undervalued.
In April and May, Ethereum ETH price displayed relative strength by assuming leadership for the entire cryptocurrency market. The underlying fundamentals driving that performance have not changed, and Ethereum is just beginning to capture the interest of institutional investors.
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