In recent times, Ethereum has experienced a significant downturn in its value. However, there seems to be some hope on the horizon as the cryptocurrency has found support in a crucial zone. This zone is defined by the 100-day moving average and a critical price range that falls between the 0.5 and 0.618 Fibonacci levels. As a result, many experts are predicting a bullish rebound in the medium term.
Taking a closer look at the daily chart, it is evident that Ethereum has been undergoing a period of corrective retracements. This downward movement has ultimately led to the price finding support within the aforementioned pivotal zone. With the 100-day moving average hovering around $3050 and the key price range between $3190 and $2972, this zone is proving to be crucial in attracting demand and preventing further downward pressure from sellers.
Moreover, there is a minor bullish divergence between the price and the RSI indicator, signaling a potential uptrend in the near future. If this trend continues, Ethereum could aim to reclaim the $3.5K threshold. However, it is important to note that a breach below the support zone could spell trouble for the cryptocurrency, causing it to plummet towards the 200-day moving average at $2.5K.
Delving into the 4-hour chart, a descending wedge pattern has emerged during a lengthy consolidation correction period. Following a sharp decline, Ethereum’s price has now reached the lower boundary of the wedge and is hovering around the $3K support region. Despite the price being relatively stable, there is a noticeable tug-of-war between buyers and sellers.
Interestingly, there is a divergence between the price and the RSI indicator on the 4-hour timeframe, indicating the strength of buyers. This could potentially lead to a bullish upswing in the medium term, with the next target being the critical resistance level at $3.5K. However, should the support zone be breached, Ethereum may be headed towards the $2.7K support level.
As Ethereum shows signs of recovery, it is essential to determine the driving force behind this resurgence. One key metric to consider is the funding rates, which can provide insights into whether the price movement is influenced by spot buying or leveraged futures activity. Positive funding rates typically indicate bullish sentiment, while negative rates suggest fear in the market.
Looking at the recent downtrend in Ethereum’s price, it is evident that the funding rate metric has followed a similar trajectory, steadily declining until reaching near-zero levels. This alignment indicates that the recent price drop has led to the liquidation of many positions in the perpetual market, subsequently cooling off the futures market. As a result, the market seems poised for a resurgence of long positions and a potential upward surge in the future.
Ethereum is at a critical juncture, with various factors influencing its price movement and market sentiment. While there are indications of a potential bullish rebound in the medium term, it is essential for investors to closely monitor the support and resistance levels to make informed decisions. Only time will tell whether Ethereum can overcome its current challenges and reclaim its position as a leading cryptocurrency in the market.
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