According to U.Today, the 100eyes Crypto Scanner account has identified a bearish divergence on the hourly Ethereum chart. This phenomenon occurs when a cryptocurrency records higher highs on the price chart while simultaneously recording lower lows on the relative Strength Index (RSI) momentum oscillator. The RSI, which oscillates between 0 and 100, indicates whether an asset is overbought or oversold. If the price moves in the opposite direction of the oscillator, traders can spot divergence, which can be either bullish or bearish.
In this instance, traders have identified a bearish divergence as the RSI is down, despite Ethereum recording substantial gains over the weekend. This divergence suggests buyer exhaustion, indicating that maintaining the ongoing bullish momentum could be challenging. Ethereum's price spiked substantially on Sunday, surging by more than 6% and significantly outperforming Bitcoin over the past 24 hours. However, Ethereum is now down roughly 4% as the market grapples with significant Bitcoin ETF outflows and fresh macroeconomic uncertainty.
Concerns about 'stagflation', a state of high inflation and low economic growth, are becoming increasingly prevalent following recent economic data. JPMorgan boss Jamie Dimon recently warned that the current economic climate is reminiscent of the 1970s. The likelihood of several rate cuts has decreased, which is not a favorable outcome for risk assets. As it stands, Ethereum is on track to record its first monthly close in the red this year after seven consecutive months of growth.
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