Ethereum Set to Retest $3.5K as Bullish Sign Reappears (ETH Price Analysis)

After experiencing a rapid slowdown, ethereum found itself supported by a substantial zone, comprising the 100-day moving average and a critical price range between the 0.5 and 0.618 Fibonacci levels. Consequently, an upward rebound is anticipated in the medium term.

By shayan

The daily chart

A close examination of the daily chart reveals a prolonged period of corrective pullbacks, culminating in the price finding support within a fundamental zone.

This zone encompasses the 100-day moving average at $3,050 and the important price range between the 0.5 ($3,190) and 0.618 ($2,972) Fibonacci levels.

This range is important as it attracts considerable demand, potentially hindering further downward pressure from market sellers. Furthermore, a minor bullish divergence between the price and the RSI indicator suggests the potential for a bullish resurgence, aiming to reclaim the $3,500 threshold. However, despite the bullish indications, an unexpected break below this critical support zone could trigger a cascading effect towards the 200-day moving average at $2,500.

The 4 hour chart

A closer inspection of the 4-hour chart reveals the formation of a falling wedge pattern during a multi-month consolidation correction. After a significant drop, the price reached the lower boundary of the wedge and the support region around $3K.

However, given the possible buying pressure within this crucial range, the price has entered a consolidation phase characterized by minimal volatility.

This price action highlights a tug of war between buyers and sellers. However, a notable divergence between the price and the RSI indicator on the 4-hour chart suggests the strength of the buyers, increasing the probability of a bullish rally in the medium term. In such a scenario, the next target for the price would be the critical resistance level of $3,500. Conversely, if a break below this support occurs, a decline towards the $2,700 support becomes increasingly likely.

By shayan

As ethereum price shows signs of recovery, it is crucial to determine whether this resurgence is due to spot purchases or leveraged futures activity. A key metric for this analysis is funding rates, where positive values ​​signify bullish sentiment and negative values ​​indicate fear in the market.

Looking at the recent downward trend in the price of ethereum, it is notable that the funding rate metric has mirrored this trajectory, steadily declining to near-zero levels. This alignment suggests that the recent price decline has led to the liquidation of a significant number of positions in the perpetual market, which has had a cooling effect on the futures market. Consequently, the market appears primed for a resurgence of long positions, with potential for a further rise.

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