Ethereum price recently received support at the 200-day moving average and subsequently embarked on a strong bullish rally, breaking above the 100-day moving average. This could be a positive indicator for Ethereum’s medium-term prospects, but also carries the risk of being a bull trap.
Technical analysis
By Shayan
the daily chart
After a period of correction and a significant downtrend, the price reached the $1.6K level, which coincided with the 200-day moving average and found support. Significant buying pressure at this level triggered a quick reversal and an uptrend towards the critical resistance zone around $2K.
Furthermore, the price broke above the 100-day moving average at $1.8K, suggesting a bullish bias for Ethereum in the medium term. However, in order to confirm the presence of a bull market in 2023 and restore sufficient demand in the market, the Ethereum price still needs to overcome substantial resistance in the $2K region and consolidate above it.
The 4 hour chart
In general, the Fibonacci Retracement Tool is useful for identifying potential reversal points and correction targets during impulsive trends. As mentioned above, the Ethereum price underwent a mid-term correction phase after reaching a yearly high of $2.1K via an impulsive uptrend.
Examining the chart reveals that the bearish correction leg found support and reversed at the 61.8% retracement level, a commonly seen target for correction phases. The prevailing buying pressure within this critical range resulted in a solid uptrend towards the $2K region.
If the price successfully breaks through the significant resistance around $2K, it will pave the way for a medium-term uptrend, as this level has psychological significance. However, the bearish divergence between the price and the RSI indicator is worth considering, which suggests the possibility of a slight rejection and consolidation in the short term before Ethereum makes its next move.
chain analysis
By Shayan
Ethereum has been consolidating below the $2K level for the past few months after being rejected from that level. The uncertainty seen on the price chart is also reflected in the sentiment of the futures market.
This chart shows the funding rate metric, which indicates whether futures market sentiment is bullish or bearish. Recently, after a period of market correction, which coincided with a downward trend in the funding rate metric, the price found support and began a strong rally.
However, the metric has started to trend slightly higher during this bullish rally, suggesting more buying pressure and a greater tendency among participants to go long rather than short.
While this could be seen as a bullish sign for the market, traders should be careful as it may actually be a bull trap, which could lead to a long compression event.
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cryptocurrency charts by TradingView.
