ETH’s path to $3000 involves holding this critical support (Ethereum Price Analysis)

ethereum’s bullish momentum has weakened after breaking the middle trendline of a multi-month-old descending channel, resulting in moderate sideways price action.

This consolidation phase could lead to a pullback, potentially setting the stage for the next leg of the uptrend.

Technical analysis

By shayan

The daily chart

ethereum experienced a surge driven by increased buying activity in both the perpetual and spot markets, breaking above the crucial resistance level of $2,500. This breakout indicates buyers’ intent to push eth towards its yearly high of $4,000 despite the bearish sentiment prevailing over the past few months.

Currently, ethereum price is consolidating in a sideways pattern, which suggests a possible pullback towards the recently broken trendline. If the price retraces to the $2,500 level and finds strong support, the pullback is likely to conclude, which will position ethereum for a fresh push towards the upper boundary of the channel, around the $3,000 mark.

The 4-hour chart

On the 4-hour chart, ethereum’s upward momentum stalled upon reaching the important resistance zone near the 0.5 Fibonacci retracement level ($2,600). This area features a supply zone that has been consistently acting as a barrier for buyers targeting the $3,000 resistance level.

While eth may face a period of sideways consolidation or corrective pullbacks in the near term, a resurgence of bullish momentum could lead to a breakout above this resistance zone. If this occurs, a short squeeze event may occur, which will drive further price gains. However, for now, a consolidation phase is expected before ethereum makes its next impulsive move.

On-chain analysis

By shayan

The perpetual futures market plays a significant role in driving overall price movements, so it is essential to assess the sentiment of futures traders for clues about potential trends. This analysis focuses on the 30-day moving average of ethereum funding rates, a key metric that provides insight into whether buyers or sellers are more aggressive in executing market orders within the futures market.

The 30-day moving average of eth funding rates has recently shown a slight bullish shift after a prolonged decline. This shift has coincided with a broader market rally and a rebound in eth price, suggesting a possible change in overall sentiment. Rising funding rates indicate increased buying activity among futures traders, indicating that market participants may be becoming more optimistic.

For ethereum to continue its recovery and target higher price levels, demand in the perpetual futures market needs to continue to increase in the coming weeks. A sustained uptrend in funding rates could fuel further price increases in the medium term. However, this bullish sentiment will need consistent follow-through from buyers to maintain momentum, as any significant reversal in funding rates could halt ethereum price growth.

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