The ethereum price has been consolidating after a significant drop a few weeks ago, giving market participants hope that the price is creating a bottom.
Technical analysis
By: Edris Derakhshi
The daily chart
On the daily chart, the price has been gradually marking higher highs and lower lows since it bounced off the $2100 support level. However, the market is yet to break above the $2700 resistance, while a rejection could lead to another drop to $2100.
On the other hand, if the market manages to overcome this resistance, a rise towards $3,000 would be imminent in the short term.
The 4-hour chart clarifies the recent price action as the market has been moving within a rising wedge pattern.
These are mostly bearish. A break below the wedge could continue towards the $2,100 level and even lower. However, if the market somehow breaks the pattern to the upside, a quick rise towards the $3,000 resistance zone and even higher could be expected.
ethereum’s recent downtrend has led many investors to change their opinion on the direction, believing that the uptrend has ended. This is particularly seen in the sentiment of the perpetual futures market.
This chart presents ethereum's open interest (OI), which measures the number of open perpetual futures positions across all derivatives markets. High OI values typically indicate bullish sentiment among futures traders and vice versa.
As the chart shows, open interest has dropped significantly during the recent massive price drop and has yet to recover. This may be a good sign as the price will be less volatile and more driven by the spot market. Therefore, with enough demand in the spot market, ethereum could soon begin a sustainable rally.
