Ethereum broke below a head and shoulders neckline to indicate that a selloff is underway. However, there are several support areas nearby that could keep losses limited.

Price is currently testing the 200 SMA dynamic inflection point, which could lead to some profit-taking and a bounce at least to the nearby resistance areas. The 100 SMA is still above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that there’s a chance the uptrend could resume.

Then again, a break below the 200 SMA could reflect strengthening bearish pressure, possibly sending ethereum down to the next floor at the ascending trend line connecting the lows on the daily time frame. This is around the $500 major psychological level.

Stochastic is already indicating oversold conditions and looks ready to turn higher, which could draw more buyers in. RSI is also near the oversold area, which means that sellers are already exhausted. Take note, though that the head and shoulders spans $700 to $1400 so the selloff could last by the same height.

Cryptocurrencies are under heavy pressure these days owing to several negative industry updates and jitters ahead of the G20 Summit. World leaders are mostly cautious of altcoins like ethereum, with IMF head Lagarde recently highlighting the risks of cryptocurrencies.

A push for stricter regulation could mean more losses in general while the openness for further industry development could allow the rally to resume.

Keep in mind also that the US dollar is awaiting the FOMC decision next week during which the Fed is likely to hike interest rates. This could also have a simultaneous effect of dampening risk appetite, which might lead to more downside for the likes of ethereum.

However, there have been instances in which altcoins have been able to take advantage of risk-off flows, particularly when fears of a trade war escalate and prove negative for the dollar.

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