How to Trade the Ethereum Death Cross of 2022?

The infamous death cross signal was just triggered (January 28) on the Ethereum (ETH) daily chart. The second-largest cryptocurrency by market value has lost over 54% of its value. However, this figure aligns with previous corrections that fall between 50% and 70%.

Death Cross Signal

Since the moving averages are lagging indicators, the death cross signal lags behind the price. This phenomenon can be observed if we track the previous death cross signals. Since 2018, we have had 4 death cross signals:

• April 11, 2018 – ETH's price rallied over 95%

• September 5, 2019 – ETH's price rallied over 28%

• April 11, 2020 – ETH's price rallied over 209%

• August 2, 2021 – ETH's rallied over 57%

So, in three out of the four instances, the death cross acted as a contrarian signal. This gives us a 75% probability for ETH's price to bottom out. Please keep in mind this is just a game of probability, and things can change really fast in volatile markets.

So, in three out of the four instances, the death cross acted as a contrarian signal. This gives us a 75% probability for ETH's price to bottom out.

Please keep in mind this is just a game of probability, and things can change really fast in volatile markets.

Technical Picture

Additionally, ETH's price has been trading in a descending channel since the high on December 1, 2021, and now prices are bouncing off the lower border.

We have the stochastic coming out of oversold readings and pointing upwards, and the RSI oscillator is on track to break its downward trendline, which can spur more bullish momentum.