Death cross formation indicates a possible drop of ETH to $2,100

Last week, ethereum flashed a significant bearish signal as the price completed a pullback towards the lower boundary of a multi-month wedge. The 100-day moving average also crossed below the 200-day moving average, forming the well-known “Death Cross.”

This development has raised expectations for a continuation of the downtrend towards the $2,100 threshold.

Technical analysis

By shayan

The daily chart

ethereum has been in a marked bearish trend over the past few weeks, creating fear and uncertainty among market participants. The price has completed a pullback to the lower boundary of a multi-month wedge, beginning a significant decline.

This bearish momentum is reinforced by the formation of the “Death Cross,” where the 100-day moving average has crossed below the 200-day moving average, a classic bearish indicator. This development has resulted in bearish sentiment in the market, triggering panic selling and increasing the likelihood of a continued downtrend towards the $2,100 support level in the near term.

The 4-hour chart

On the 4-hour chart, eth met with a firm rejection from the critical resistance zone between the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci levels. This led to a sharp decline that broke through the lower boundary of a corrective ascending wedge. This breakout indicates a dominant bearish trend, with sellers driving prices lower. Recently, the asset attempted a pullback to the broken wedge, suggesting the possibility of further bearish continuation.

ethereum’s next significant support lies around the $2.1K level, where demand could re-emerge to halt bearish pressure temporarily. However, until this level is tested, the prevailing bearish trend is expected to persist, with the $2.1K threshold being the primary target for the near term.

On-chain analysis

By shayan

As the price of eth has seen a noticeable downward trend recently, traders are wondering whether the market is in an accumulation or distribution phase. The ethereum Exchange Reserve metric, which tracks the amount of eth held in exchange platform wallets, provides valuable insight into this question. Coins held on trading platforms are often considered an indicator of supply, as they can be sold quickly.

Between June and August, the metric showed an upward trend, indicating a distribution phase that contributes to the current downtrend. Following the recent death cross, the foreign exchange reserve metric is once again rising strongly. This suggests that another distribution phase may be developing.

As ethereum reserves on exchanges continue to grow, so does the likelihood of a decline in demand and, consequently, a further price drop. However, it is also important to consider the state of the futures market, as it plays a crucial role in determining price action and should be carefully analyzed before drawing any definitive conclusions.

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