ETH tests $2K, but is another correction imminent? (Ethereum Price Analysis)

Technical analysis

By Commercial fury

ethereum price fell below the key $2,000 level once again, following weeks of aggressive rallies. However, a bullish continuation still cannot be ruled out, as the market is apparently rallying back above the mentioned level.

The daily chart

On the daily chart, the price has been decisively rejected from the $2,150 resistance level and fell below the $2,000 mark.

The Relative Strength Index had previously signaled the probability of this correction with a clear overbought signal. Right now, the market is once again testing the $2,000 resistance level and could break above it again soon. The near future of price action largely depends on the reaction to the $2,000 zone.

The 4 hour chart

As the 4-hour time frame shows, while the market has been trending lower, significant bearish momentum is missing. This can be interpreted both by the fact that the relative strength index fails to reach extremely low values ​​and by the formation of a bullish flag.

The flag is a classic continuation pattern and indicates that the market is likely to be in a correction phase rather than a complete bearish reversal. In this case, a bullish break above the flag would initiate the bullish continuation.

Needless to say, if the flag breaks, things could quickly turn ugly for ethereum and a deeper drop could be expected.

Analysis of feelings

By Commercial fury

Financing rates

Following the recent rise in ethereum price, market participants have become optimistic about the future of the market in the medium term. This has generated considerable buying pressure in both the spot and futures markets.

This chart shows funding rates, which are one of the most telling metrics when it comes to gauging futures market sentiment. Positive values ​​show bullish sentiment, while negative values ​​are associated with bearish sentiment.

It is evident that funding rates have shown significantly high values ​​over the past few weeks. Meanwhile, a decline has recently started with the price correction. Extremely positive funding rates are usually seen when the price peaks and is about to pull back or reverse.

The reason for this phenomenon is that with high funding rates, the risk of a long cascade of liquidations increases dramatically. As a result, investors should be cautious as the recent price drop could be the beginning of a broader bearish phase.

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