Is ETH about to fall below $1,500? (Ethereum Price Analysis)

After a brief rally, ethereum faced a significant rejection, causing the price to retreat towards the critical $1,500 support zone.

Currently, there is a strong attempt to break below this crucial support. If successful, the market may experience sharp declines.

By shayan

Looking at the daily chart, ethereum initially showed strong bullish momentum after finding support around the $1,500 range. However, upon reaching the 100-day moving average at around $1.7K, ethereum was rejected, leading to a strong downtrend.

This downtrend returned to the broken 100-day moving average, indicating a highly bearish trajectory for eth price. It has now revised its previous major low of $1,529, aligning with the important 61.8% Fibonacci threshold support level. This zone serves as a final defense for the bulls, and a break below it could trigger a rapid market cascade.

Analyzing the 4-hour chart, we can see a period of sideways consolidation marked by a falling wedge pattern. This consolidation range is capped by the important support at $1,500 and the notable resistance at $1,700. However, the price recently faced a rejection from the upper boundary of this range, leading to a strong downtrend that approached the lower boundary.

The market is about to fall below the $1,500 support, and the prevailing bearish sentiment strengthens the position of the sellers. A break below this support has become a clear possibility.

It is important to note that if the buyers manage to dominate the sellers, a sudden reversal could occur, which could result in the liquidation of numerous short positions.

By shayan

The following chart illustrates the estimated leverage ratio metric in relation to the price of eth. Provides information on the average leverage used by participants in the futures market. Higher values ​​indicate greater leverage and risk assumed by traders in the derivatives market.

Historically, the metric had been in a downtrend, hitting a yearly low. This signaled a period of stability in the futures market, with traders employing lower leverage. However, there has been a notable increase in the Estimated Leverage Ratio in recent weeks. While it has not yet reached alarming levels, this rally suggests growing enthusiasm in the futures market, possibly leading to greater use of leverage.

If this increase continues, it could indicate an overheating of the futures market. Although the situation is not alarming at this time, it is important to view the continued rise of this metric with caution. Further increases could trigger a short-term or long-term squeeze event, resulting in sudden and significant movements in the price of ethereum.

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