After being strongly rejected from the 100-day moving average, ethereum saw a rapid decline, finding support at the critical 61.8% Fibonacci retracement level.
This level coincides with the previous major low of $1,529, serving as the last line of defense for the bulls. A break below this point could trigger a rapid market cascade.
Technical analysis
By shayan
The daily chart
Examining the daily chart, ethereum‘s trajectory turned very bearish after the rejection of the 100-day moving average around $1,700. It completed a pullback and validated the breakout, eventually landing at the 61.8% Fibonacci threshold, where it found support.
The recent bounce indicates a possible bullish reversal, but this scenario will only materialize if demand increases substantially, leading to the formation of larger bullish candles. The viability of this possible bullish reversal depends on the resurgence of buyers’ dominance in the market.
The 4 hour chart
Analyzing the 4-hour chart, a period of sideways consolidation is seen, 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. Following a recent move lower that touched the lower threshold of the wedge, the price found support, resulting in a slight rally.
However, given ethereum‘s overall bearish outlook and the current bounce lacking significant bullish momentum, a true bullish reversal would require a notable increase in buying pressure, leading to buyers’ dominance in the market. If the buyers manage to overpower the sellers, a sudden reversal could occur, which could lead to the liquidation of numerous short positions.
Regardless of the result, it is essential to closely monitor price developments in the coming days. Medium-term volatility is expected to increase significantly, which will determine the direction of the market. Traders must remain alert and prepared for any changes in the market to make informed trading decisions.
Chain analysis
By shayan
Despite ethereum‘s recent downtrend following its inability to break above the $1,700 resistance region, an intriguing development in the futures market indicates notable bullish sentiment.
The chart shows the buyer’s bid-ask ratio, a crucial metric for assessing sentiment in the futures market as it measures whether buyers or sellers are executing more aggressive market orders.
During the recent price drop, the buyers’ bid-sell ratio saw a rapid increase, approaching the 1 mark. This suggests that market participants see the price depreciation as an opportunity to accumulate and invest in the ethereum market. If this metric continues to surpass 1, it could pave the way for a bullish market reversal, with the price setting its sights on levels above $2,000 in the coming months.
This change in sentiment is significant and suggests that traders and investors have found the current market conditions attractive for long positions. It is crucial to closely monitor this metric as it could provide valuable insights into ethereum‘s future price movements and potential opportunities for traders.
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