Ethereum (CRYPTO: ETH) was sliding more than 7% lower on Thursday, trading dangerously close to the important $1,000 psychological level, which the crypto tested as support on June 18 and June 19 but bounced.
The more times a stock or crypto tests an area of either support or resistance, the weaker the area becomes, which could be bad news for bullish investors. The decline on Thursday also negated Ethereum’s uptrend, suggesting the crypto may begin a new downtrend.
A downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart.
The lower lows indicate the bears are in control while the intermittent lower highs indicate consolidation periods.
Traders can use moving averages to help identify a downtrend with descending lower timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term downtrend.
Descending longer-term moving averages (such as the 200-day simple moving average) indicate a long-term downtrend.
A stock often signals when the lower low is in by printing a reversal candlestick such as a doji, bullish …
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