Will ETH Fall to $2.1K After Being Rejected at $2.7K?

ethereum has been rejected from the crucial 100-day MA of $2.7K, indicating a bullish trap. This price action hints at seller dominance, and the asset is expected to continue its downward consolidation stage towards the $2.1K threshold.

Technical analysis

By shayan

The daily chart

ethereum recently experienced a surge past the 100-day moving average at $2.7K and the neckline of an inverted head and shoulders pattern, triggering a brief liquidation event. This initial move was a bullish signal, which briefly pushed the price up. However, a rejection at the $2,700 level has caused a 12% drop, pushing the price back below the 100-day MA and the neckline.

This suggests that the breakout was false, forming a classic bull trap and highlighting the growing dominance of sellers. ethereum is now consolidating near the $2,500 support zone, but the price is expected to continue declining, with the next major target being the $2,100 support level.

The 4 hour chart

In the 4-hour period, eth's brief push above the 0.618 Fibonacci level ($2,700) was met with substantial selling pressure, most likely from institutional or smart money traders. These market participants exploited liquidity above $2,700 and executed sell orders in a manipulative move that caused a sudden drop in price.

ethereum has since fallen to the lower boundary of its ascending flag pattern, currently located around the $2.4K region. This level may provide short-term support and could trigger a consolidation within the flag.

eth could remain at this level in the short term, entering a consolidation phase before determining its next move. If buying pressure increases, a possible retest of the $2,700 resistance could occur. However, a break of the $2,400 support would likely trigger further bearish momentum, with ethereum heading towards the critical $2,100 support as the next major target.

Chain analysis

By shayan

The aforementioned major rejection at the $2,700 resistance zone represents an area characterized by a high concentration of short positions. Analysis of the futures market sheds light on the underlying dynamics, as the smart money likely tapped into this liquidity pool to trigger liquidations and execute their sell orders.

This strategic move by institutional traders caused the price of ethereum to temporarily rise, only to face rejection and begin a downward correction.

Liquidity concentration is now moving below the $2.4K support level, indicating eth's next likely target in the medium term. The presence of considerable liquidity below this zone makes it an attractive area for market participants, suggesting that ethereum may continue its decline towards the $2,400 region and possibly higher, as part of its corrective phase.

Given the technical setup and future market dynamics, ethereum is expected to maintain downward pressure in the coming days, with a potential target below $2,400.

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