Is ETH About to Fall to $3K After Recent Rejection?

ethereum's attempt to break through the crucial $4,000 mark failed, sparking strong rejection and raising concerns about sellers' dominance in the market.

Fear is rising, with expectations of a possible sell-off in the coming days if key support levels do not hold.

Technical analysis

By shayan

The daily chart

ethereum recently experienced a spike, targeting the crucial $4K resistance. However, significant selling pressure in the fair value gap between $3.7K and $3.8K led to firm rejection.

It has left eth approaching its previous low of $3.3K. A daily candle close below this level could indicate further bearish momentum. However, in the bigger picture, the $3,000 support region remains the critical defense zone for buyers as it aligns with the critical 100-day moving average. ethereum may experience a significant drop in the medium term if the price falls below this region.

The 4 hour chart

On the lower time frame, ethereum price action formed a three-pulse pattern in the $4K region, accompanied by a bearish divergence on the RSI indicator. This bearish reversal pattern highlights a loss of buying momentum.

The asset has since broken through the crucial $3,500 support region, triggering a pullback and subsequent cascade. Currently, ethereum is approaching a key support region at its major low of $3K, aligning with the 0.5-0.618 Fibonacci retracement levels.

Failure to hold this support could lead to further declines, with potential targets at lower price levels in the medium term.

Chain analysis

By shayan

The sustainability of any increase in market prices often depends on rising funding rates, which reflect strong demand in the derivatives market. Without this increase, upward trends may falter. Notably, this rise does not need to occur immediately, but its absence during a rally raises concerns about the strength of the market.

During ethereum's recent rally, funding rates rose sharply midway through the uptrend, suggesting a delayed influx of demand. However, after eth faced rejection from the $4K resistance, funding rates decreased significantly.

This decline highlights reduced commitment from traders in the derivatives market and insufficient demand to maintain the bullish trend. If ethereum fails to hold above the $3,000 support, the market could face increased selling pressure and deeper corrections. Therefore, the $3K support level remains crucial for eth's next move.

<!– ai CONTENT END 1 –>