Technical analysis
ethereum‘s recent strong rally encountered resistance as it reached a critical price region, encompassing the $2,000 threshold and the upper limit of a rising wedge.
This resulted in a consolidation correction phase, pulling back towards the 100 and 200 day moving averages (MA).
A thorough analysis of the daily chart exposes a notable presence of supply in the crucial $2,000 region, coinciding with the upper limit of the multi-month wedge.
Selling pressure at this fundamental resistance zone interrupted the significant bullish momentum, ushering in a consolidation correction phase within the market.
Considering the importance of the $2,000 resistance and the upper boundary of the associated wedge pattern, there is a high probability of a temporary extension of the ongoing pullback, followed by consolidation around the surpassed moving averages.
If the price completes a pullback towards these moving averages, it could prompt buyers to re-enter the market with the aim of challenging the substantial $2K level once again.
On the 4-hour chart, it is evident that ethereum‘s strong uptrend lost steam as it encountered the critical resistance at $2,000. This region represents a fundamental psychological barrier, creating obstacles for buyers looking to push the price higher due to a notable presence of supply, indicating increased selling pressure in this key area.
Following a rejection near the $2,000 resistance zone, the price entered a consolidation correction phase, forming a bullish flag pattern. This well-known technical pattern implies a possible continuation of the initial uptrend, depending on a successful breakout of its upper boundary.
Given the current market dynamics, there is a considerable probability of an extended consolidation correction phase in the near term, targeting the support range between the 0.5 and 61.8 Fibonacci retracement levels ($1,839 – $1,769).
However, in the event of a sudden breakout above the flag’s upper limit, the market could see a substantial rise, aiming to reclaim the decisive $2,000 resistance zone.
In the wake of ethereum‘s recent price surge, market participants have adopted an optimistic outlook for the medium-term future. This positive sentiment has triggered significant buying activity in both the spot and futures markets.
The accompanying chart illustrates funding rates, a crucial metric for measuring sentiment in the futures market. Positive values indicate bullish sentiment, while negative values are associated with bearish sentiment. In particular, financing rates have consistently shown high values in recent weeks. However, a notable drop has emerged at the same time as a pullback in the price of ethereum. This change suggests a temporary pause in the futures market, primed for a possible new, impulsive move.
Despite this, investors should be cautious, considering that the recent price decline may mean the start of a longer bearish phase, which could lead to the liquidation of a significant number of long positions.
Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off fees on Binance Futures for the first month (terms).
Disclaimer: The information found on CryptoPotato is that of the writers cited. It does not represent CryptoPotato’s opinions on whether to buy, sell or hold investments. It is recommended that you conduct your own research before making any investment decisions. Use the information provided at your own risk. See Disclaimer for more information.
Cryptocurrency charts by TradingView.
<!– ai CONTENT END 1 –>
