The previous week was decisive for Ethereum as the token reached $2,000 at some point but failed to settle above this level. The same was true for Bitcoin which approached the mark of $25,000 but then started to decline. As a rule, the test of an important resistance level activates the selling pressure and the local decline of the price. In the case of ETH, the correlation with BTC was the main factor of decline as the number one cryptocurrency plunged amid the negative background and the pressure from miners. At the same time, it is not only the correlation with BTC that pushed Ethereum lower to $1,500.
Unlike Bitcoin, Ethereum had serious fundamental support from the upcoming Merge upgrade. The bullish activity on ETH can be seen on altcoin's weekly chart. The cryptocurrency had formed 6 bullish candlesticks in a row in one week which is a great result for an upside movement supported by the fundamental background. Yet, if we analyze the bullish trend on ETH, we can see that 6 to 7 bullish candlesticks is the maximum upside potential of the coin. The green candlestick formed between August 8 and 15 turned out to be the sixth and the final one. Therefore, ETH was also prepared for a correction from the fundamental point of view.
It is important to note that in the course of the continued downtrend the price may test the level from which the uptrend could possibly develop. In other words, ETH is very likely to retest the level of $1,000. On the weekly chart, the downtrend continues and the bearish engulfing pattern is being formed. The RSI surged to the upside but then faced the pressure from bears. The Stochastic Oscillator followed the same scenario. It is now finishing the formation of the bearish crossover. Meanwhile, the MACD indicator signals a flat movement which may indicate the impulse nature of the decline.
On the daily chart, Ethereum is also showing weakness. The technical indicators are sliding to the lower boundary of the ascending channel, while MACD is entering the red zone, thus signaling the growing strength of the downward movement. The Stochastic Oscillator on D1 repeats the trajectory from the weekly chart and forms the bearish crossover in the overbought zone. The RSI is also moving downwards and crossing the mark of 40. All these factors confirm strong downward pressure. At the same time, indicators are slowly entering the overbought zone which signals the end of the correction.
Fundamentally, the asset is still attractive to investors. Despite coinciding with a rapid drop in BTC, the ongoing correction may signal a recovery. The main altcoin has been rising steadily for the whole month, so a correction was natural. Besides, the start of a corrective movement in ETH coincided with the negative news about Ethermine, the largest Ethereum mining pool. The company announced that after the transition to PoS the system will switch to withdrawal-only mode. Ethermine is not planning to offer its services to any of the PoW forks. This news was negative for the Ethereum team which is actively promoting it ahead of the upcoming upgrade.
Nevertheless, the investment potential of the altcoin will remain high at least until mid-September when the final merge is planned. The current correction is likely to end with a retest of the $1,000 level which may be followed by a strong bullish bounce. In this case, the uptrend may persist until the planned upgrade. We shall not forget about the completion of the Cup and Handle pattern that may potentially bring the price to $2,800. Ethereum may well reach this target as soon as this September.