Understanding Ethereum’s price dynamics can be complex, especially when considering recent trends. As of late, Ethereum (ETH) encountered resistance at the multi-month descending channel’s midpoint of $2.6K. This false breakout was followed by a notable rejection and subsequent decline, which suggests that Ethereum’s next likely target might be a shift towards the $2.1K support level.
By Shayan
Daily Market Insights: Ethereum’s Price Trajectory
On the daily chart, Ethereum’s recent price actions have unveiled a bull trap scenario. Similar to events in late August, the cryptocurrency exceeded the descending channel’s midpoint but quickly faced rejection, leading to a steep 15% decline. This inability to sustain a higher high underscores the market dominance of sellers. As Ethereum nears the critical $2.1K support, aligned with a previous major swing low, a descent into a corrective phase seems probable. This phase may guide ETH gradually toward this pivotal support zone.
Ethereum Insights: Recent Trends and Forecasts
Examining the 4-hour chart reveals Ethereum’s struggle to maintain momentum around the 0.5 ($2.6K) – 0.618 ($2.8K) Fibonacci levels, prompting a bearish three-drive pattern. This common reversal pattern, coupled with bearish divergence on the RSI, signals that sellers are regaining market control. Consequently, Ethereum saw a downturn towards the ascending flag’s lower boundary of $2.3K. If sellers break this lower boundary, a fresh bearish phase might start, possibly pushing ETH toward the psychological support at $2K. Meanwhile, the $2.1K level remains a critical defense line for buyers.
By Shayan
In addition to technical analysis, focusing on Ethereum’s 50-day moving average funding rates adds another layer of understanding. The ongoing decline to its lowest point in 2024 signals bearish sentiments in the futures market. Such trends illustrate the absence of strong buying enthusiasm. In these scenarios, short-sellers often exert more influence, leading to depressed prices. To counter this and see positive price movements, an uptick in demand from the perpetual futures market is necessary. The continuing fall in funding rates suggests robust selling pressure and indicates cautious sentiments for ETH moving forward.
While these negative rates generally indicate challenging market conditions, they might also highlight a potential for trend reversals through short liquidation cascades. This happens when short positions are aggressively liquidated, potentially creating a rapid price increase. For such a reversal to materialize, significant buying pressure from the spot market is crucial to support a recovery.
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Cryptocurrency charts by TradingView.
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