Technical analysis
Recent ethereum market activity highlights a dominant presence of buyers, driving the price into a solid uptrend and reaching the fundamental resistance level of $2,000. However, there is a possibility of a temporary consolidation phase around this crucial resistance in the coming days.
Analyzing the daily chart, it is evident that a successful break above the 100-day and 200-day moving averages at around $1,700 fueled significant bullish momentum, resulting in a notable rise. The intensification of buying pressure led the price to reach the critical resistance zone of $2,000, marked by its psychological importance and predominant supply.
Despite this upward move, ethereum has formed a long-term rising wedge pattern, with the price poised to break above its upper trend line.
If buyers successfully push the price above the $2,000 resistance as well as the upper boundary of the wedge, a medium-term uptrend could be imminent. However, considering the existing supply around this fundamental resistance, a temporary rejection followed by a consolidation towards the broken moving averages seems more likely.
On the 4-hour chart, the break above the upper threshold of the falling wedge prompted buyers to push the price towards the important resistance of $2,000. This uptrend was characterized by increased bullish momentum, illustrating the buyers’ control over the market.
However, the $2,000 price region poses crucial resistance, where buyers may find challenges in pushing the price up. Furthermore, a notable bearish divergence between the price and the RSI indicator suggests that the current buying pressure might not be enough, which could lead to a minor rejection followed by slight corrections. Consequently, the market could witness increased volatility until bullish momentum is restored to regain this fundamental resistance.
Given the current market scenario, there is a high probability that the consolidation correction phase will be prolonged in the short term. This implies that the market could continue its sideways movement before definitively determining its next course of action.
ethereum has demonstrated solid upward momentum, seeing a significant rally in recent weeks and approaching the critical $2,000 level. To assess the sustainability of this increase, it is essential to examine the sentiment in the futures market, which will provide valuable information on market dynamics.
The chart shows funding rates, a crucial metric that provides insight into trader sentiment in the perpetual futures market, with values proportional to the number of contracts.
Recently, this metric has seen a substantial rise alongside the upward trend in ethereum price, reaching its highest level since November 2021. This notable rise signifies prevailing optimism in the market, with most traders speculating on a new price increase.
However, this heightened optimism poses a potential risk. Excessively bullish sentiment, as reflected by high funding rates, can cause a price squeeze, triggering a cascade of liquidations and the potential for a long-term squeeze event. Such an event could result in a sudden rejection of ethereum, catching traders off guard as they hastily exit their long positions.
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Cryptocurrency charts by TradingView.
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