Ethereum's native token Ether (ETH) is showing signs of bottoming out as ETH price bounced off a key support zone. Notably, ETH price is now holding above the key support level of the 200-week simple moving average (SMA) near $1,196.
The 200-week SMA support seems purely psychological, partly due to its ability to serve as bottom levels in the previous Bitcoin bear markets.
Independent market analyst "Bluntz" argues that the curvy level would also serve as a strong price floor for Ether where accumulation is likely.
He notes:
"BTC has bottomed 4x at the 200wma dating back to 2014. [Probably] safe to assume it's a pretty strong level. Sure we can wick below it, but there [are] also six days left in the week."
Currently, ETH/USD is almost 75% below its record high, seven months after hitting around $4,950.
This massive correction has made the Ethereum token an "oversold" asset, per its below-30 relative strength (RSI) readings, another technical indicator showing that ETH is a "buy."
The last time Ether turned oversold was in November 2018, which preceded the end of a 12-month long bear cycle that saw ETH losing 94% of its value.
Unfortunately, the same bearish exhaustion cannot be promised in 2022 as Ether continues facing some serious macro headwinds.
ETH's technical bull signals are not enough
Ether's attempt to find a concrete bottom appears against the backdrop of a selling frenzy happening across the crypto and traditional financial markets.
At the core of its 75% price correction is a hawkish Federal Reserve with its possibility of raising interest rates by 175 basis points by September's end, according to interest rate swaps linked to FOMC policy outcome dates.
In other words, riskier assets would suffer as lending costs rise. This could hurt Ether's recovery prospects despite it holding above a so-called "strong" support level.
Ether price targets
ETH's price has been testing the 0.786 Fib line (near $1,057) as its interim support. This price level serves is a part of the Fibonacci retracement graph, drawn from the $1,323-swing high to the $82-swing low, as shown in the chart below.
A 2018-like 94% price decline would risk bringing ETH to the 0.236 Fib line near $375, down 70% from June 1's price.
Related: This key Ethereum price metric shows ETH traders aren’t as bearish as they appear
Conversely, if Ether indeed bottoms out near its 200-week SMA, its path of least resistance appears to be toward $2,000. An extended upside retracement above $2,000 would have the Ethereum token test $3,500 as its next bull target.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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