Interesting Metric Raises Reversal Hopes as ETH Crashes $2,200 Support (Ethereum Price Analysis)

After facing rejection from the formidable $2.6k resistance zone, ethereum saw a substantial drop, breaking multiple critical support levels.

However, it has now landed in a substantial and decisive range, suggesting the possibility of a bullish reversal.

By shayan

ethereum Price Analysis: The Daily Chart

A detailed analysis of ethereum's daily chart reveals a notable rejection after attempting to break through the $2.6k resistance, resulting in a 20% drop. At the same time, the price surpassed two vital support zones, the upper boundary of the multi-month rising wedge and the lower boundary of the short-term expanding wedge, indicating prevailing selling pressure in the market.

This negative sentiment is further underlined by a significant bearish divergence between the price and the RSI indicator on the daily chart, which acts as a catalyst for the bearish momentum.

However, ethereum is currently approaching a substantial support zone, which encompasses the 200-day moving average and aligns closely with the key static support at $2,100. Consequently, a possible reversal leading to a consolidation phase appears to be the most likely outcome in the medium term.

The 4 hour chart

Analyzing the 4-hour chart, after an impulsive rise, ethereum encountered considerable selling pressure, starting a correction phase. This increased selling activity caused an aggressive and steep decline, resulting in a successful break below the multi-month ascending trend line, highlighting the dominance of sellers in the current market conditions.

Currently, eth price has reached a significant support region, defined by the decisive static zone at $2.1K. This crucial level has effectively halted numerous bearish attempts in recent months, establishing itself as a solid barrier against sellers.

The expectation is for the price to find support around the $2.1K zone, indicating a medium-term consolidation stage capped by the significant support at $2.1K and notable resistance at $2.5K. . Meanwhile, if a bullish pullback materializes, leading to a pullback towards the broken trendline, the possibility of a continuation of the bearish leg becomes imminent.

By shayan

While ethereum's value has seen a drop, an intriguing signal emerges from the underlying dynamics of the futures market.

The chart provided illustrates open interest, a critical metric for assessing sentiment in the futures market. Open interest measures the number of active futures positions, and higher values ​​typically correlate with higher volatility and vice versa.

Amid the recent correction, a significant drop in the open interest metric is a noteworthy development. This, accompanied by positive funding rate readings, indicates that the prevailing sentiment remains bullish, simultaneously suggesting a cooling in perpetual markets from their previously overheated state.

Consequently, there is a possibility that the price will resume its upward trajectory once the ongoing correction phase concludes.

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