What to expect? (Ethereum Price Analysis)

ethereum's recent momentum surge encountered a major hurdle as it reached a critical resistance area, encompassing the upper boundary of a multi-month wedge and the static resistance at $2,400.

Despite this, the emergence of a head and shoulders pattern suggests an imminent pullback towards the $2,000 support zone.

By shayan

The daily chart

ethereum witnessed a strong bullish trend, hitting a yearly high of $2.4K, underscoring the prevailing influence of buyers in the market. This upward trajectory is further emphasized by a golden cross on the daily chart, indicating an overall bullish sentiment for ethereum.

However, the rise was impeded by encountering a critical resistance zone formed by the upper boundary of the multi-month wedge coinciding with the crucial static support at $2,400. The resulting higher selling pressure halted the existing bullish momentum.

Despite these challenges, a potential head and shoulders pattern, a widely recognized bearish reversal formation, has taken shape. The price is about to break below the neckline of the pattern, represented by the orange line. Furthermore, an extended bearish divergence between the price and the RSI indicator suggests the possibility of a downward move in the coming days.

Considering the recent price development, a break below the pattern neckline could pave the way for a short-term bearish move. The anticipated pullback would likely bring the price back to the substantial $2,000 support range.

The 4 hour chart

A closer inspection of the 4-hour chart reveals that amid the recent sideways movement, the price found solid support within the critical range between the 0.5 ($2,211) and 0.618 ($2,166) levels of the Fibonacci retracement indicator. It acted as a barrier, preventing further attempts to fall.

Notably, this essential support range aligns with a dynamic and supportive trendline, adding additional strength against ethereum sellers. However, a scenario where sellers take control and push the price below these crucial support levels could trigger a notable waterfall, causing a pullback towards the $2,000 support region.

By shayan

In the realm of on-chain data analysis, delving deeper into the sentiment reflected in the futures market provides valuable insights into the overall outlook for ethereum. The attached chart shows ethereum's open interest metric. Traditionally, higher values ​​mean greater volatility and the possibility of market reversals, while lower values ​​indicate a more sustainable trend.

The chart highlights that bullish market moves often coincide with a gradual rally in the open interest metric. However, reaching high levels or experiencing strong increases could indicate the possibility of a significant market reversal, often attributed to long-term or short-term contraction events.

Open interest has been trending upward, although it has not yet reached the values ​​seen during significant market highs. Consequently, while corrections remain a plausible scenario, the futures market has not yet reached an overheating point. The current bullish trend is likely to endure in the long term, given the moderate levels of open interest. It becomes imperative to closely monitor this metric to discern any potential changes in market sentiment.

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