Ethereum (CRYPTO: ETH) was trading mostly flat on Friday in tandem with Bitcoin (CRYPTO: BTC) and the S&P 500, which were trading about 0.7% and 0.24% higher, respectively.
The general market and the cryptocurrency sector were due for at least a day of consolidation after a period of high volatility and bearish price action.
Ethereum and Bitcoin have followed the price action of the S&P 500 over much of the last few months, often trading in tandem when the stock market is open.
Over weekends, when the crypto sector is open but the stock market is closed, traders and investors often watch the price action of Bitcoin and Ethereum to gain perspective on the direction the S&P 500 may during the week ahead.
That will surely be the case this weekend, and after Ethereum finishes its consolidation phase, a big move could be in the cards.
Last weekend, Ethereum plunged 14% over the course of Saturday and Sunday's 24-hour trading period, which was followed by the S&P 500 gapping down 2.55% to start the trading day on Monday.
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The Ethereum Chart: After plummeting about 42% between June 7 and June 14, Ethereum has been trading sideways between $1,012 and $1,266 on declining volume.
Sideways trading combined with declining volume indicates consolidation and also suggests the crypto is running out of sellers after such a steep drop.
- The sideways price action has also ended the downtrend, although Ethereum is not trading in an uptrend. As the crypto continues to consolidate, traders and investors can watch for a tightening triangle pattern to develop and then for big bullish or bearish volume to come in and break Ethereum from that pattern.
- A move to the upside is likely to occur over the coming days because Ethereum’s relative strength index (RSI) has been hovering between 19% and 26% since June 12.
- When a stock or crypto’s RSI reaches or drops below the 30% level it becomes oversold, which can be a buy signal for technical traders.
- Ethereum has resistance above at $1,081 and $1,245 and support below at the psychologically important $1,000 mark and at $905.
