Is ETH about to fall below $3,500? This pattern hints at it (Ethereum price analysis)

After a brief consolidation near the critical $4K resistance level, ethereum encountered increased selling pressure, leading to a decline. However, there is an important support zone looming that may stop further downward movement.

By shayan

The daily chart

A closer look at the daily chart shows that after a short period of consolidation near the fundamental resistance at $4,000, ethereum faced increased selling activity, resulting in a notable rejection. This indicates strong selling interest around the previous high of $4K, highlighting aggressive short positions near this key level.

However, there is a significant support zone ahead, including the 100-day moving average at $3,430 and the 0.5 Fib retracement level at $3,419. This suggests that the current price action may continue its bearish retracement in the near term, with the 100-day moving average and the 0.5 Fib level acting as primary support for buyers.

The 4 hour chart

On the 4-hour chart, the recent consolidation near the $4,000 level has resulted in a head and shoulders pattern, indicating a lack of bullish momentum and increased supply. This well-known pattern suggests a possible short-term bearish reversal. However, the price recently broke below the neckline of this formation, increasing the probability of a bearish scenario.

Additionally, a bearish divergence between the RSI indicator and price further emphasizes seller dominance, raising concerns about ethereum's future trajectory.

Currently, the price is at a critical support level around $3,600. If sellers manage to break above this fundamental level, the most likely outcome is that the downtrend will continue.

By shayan

As ethereum price struggles to break the $4,000 mark, traders might be interested in the behavior of futures market participants.

The chart below shows the 7-day moving average of the taker's bid-sell ratio, which assesses the relative aggressiveness of buyers versus sellers. A value greater than one suggests buyer dominance, while a value less than one indicates aggressive selling.

As illustrated in the graph, the ratio has not exceeded unity and has been declining sharply in recent days. This trend suggests that most futures traders have been selling ethereum aggressively, either for speculative purposes or to make a profit. This significant drop in the metric is a bearish signal, suggesting that the current bearish retracement could persist if this trend continues.

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