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Ethereum may fall further from overbought levels

On December 1st, Ethereum crossed over its upper Bollinger band, which denotes overbought levels.

Taking a look at recent history, Ethereum had already breached its upper Bollinger band 8 times so far this year.

Such a technical event has been accompanied by an average drop of 6.8% over the subsequent 20 days, according to Bloomberg data.

Over the past 4 months, those declines have been much more acute: a steeper fall in a shorter timeframe.

Since August, the plummet from peak to trough has been measured at 30% or larger, within two weeks of breaching its upper Bollinger band.

Ethereum may fall further from overbought levels

After the violent selloff, prices either find a firmer footing or embark on another ill-fated recovery.

After all, Ethereum remains over 70% lower from its ATH (all-time high) posted back in November 2021.

Assuming that history is set to repeat itself, even using the more conservative average drop of 6.8% (as opposed to the 30+% drops) as mentioned earlier, that suggests a decline “merely” down to $1175 from current levels.

 

Week Ahead sees major catalysts for cryptos

While the declines since the December 1st technical event have been relatively tepid so far, down just about 3.5% (at the time of writing) since that December 1st intraday high, we could see a more fundamentally-driven drop in the days ahead.

Note that the coming week features these events that have been major volatility triggers:

  • 13 December: US November inflation print
     
  • 14 December: Federal Reserve policy decision

 

As we know, the Fed’s ongoing rate hikes campaign has been the biggest driver of asset prices across global financial markets this year.

Prices for stocks, bonds, currencies, commodities, and certainly crypto, have all been tossed about by shifting expectations surrounding how high the central bank will eventually send US benchmark rates, and how long policymakers will keep rates at that eventual peak.

  • A hotter-than-expected CPI (consumer price index) print, above the 7.3% median estimate, should give the Fed the green light to send rates past the forecasted 5% peak.
     
  • And if the Fed confirms such a hawkish narrative after it concludes its two-day policy meeting, the day after the CPI release, that could trigger another massive drop for Ethereum, as well as for the rest of the crypto world.

 

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