BUZZ-COMMENT-China’s crypto crackdown puts Ethereum support in jeopardy

Ethereum longs hoped the worst was over as the crypto currency recovered half of its September 16-21 drop in recent days, but actions taken by China’s regulators have put shorts in charge and key support under threat.

China’s central bank said cryptocurrencies must not circulate in markets and also barred financial institutions, payment companies and internet firms from providing cryptocurrency trading .

Cryptocurrency fell sharply on the news. Bitcoin BTC=BTSP fell below $40700 before bouncing while Ethereum encountered its largest percentage drop since September 7 as it neared $2730. Ether remained down over 10% on the session in early New York trading.

The sharp drop in Ethereum has key support in the $2595/$2650 zone now in jeopardy of breaking. The Sept. 21 daily low, 200-day moving average and 61.8% Fibo retracement of the $1717.17-$4025.00 rally sit in that zone.

Daily RSI is falling again, which implies downward momentum is in place, and a test of that support zone is likely. Should the support break, ether shorts will target $2095/$2105 and $1945/95 supports.

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(Christopeth https://tmsnrt.rs/2ZuA9J1her Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com))

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