Ethereum Pulls Back as the Merge Approaches

Ethereum’s key upgrade to proof of stake is slated for next month. It’s a good time to review the No. 2 cryptocurrency’s technicals.

The first pattern on today’s chart is the sharp pullback from above $1,900 toward the $1,600 area. This brought price back to the 50-day simple moving average (SMA). Some investors could view this as a positive sign.

Second, the current dip represents a 38 percent retracement of the run between mid-June and mid-August. That Fibonacci pattern could make some traders look for continuation of the recent uptrend.

Third, the crypto has returned to the bottom of its Bollinger Bands. That pattern could make some range traders expect a potential bounce.

Fourth, the slide brought stochastics back toward an oversold condition for the first time since the recent bounce began.

Finally, it’s an interesting timeline with a lot of negativity in the market but a potentially positive catalyst on the horizon. Traders might sell the news once it happens, but it hasn’t happened yet.

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