Ethereum, after going through a rapid downturn, has managed to find solid support within a critical zone. This zone includes the 100-day moving average and a significant price range between the 0.5 and 0.618 Fibonacci levels. The presence of this support zone indicates a potential bullish rebound in the medium term.
A closer look at the daily chart reveals a prolonged period of corrective retracements, ultimately leading to the price finding support within the pivotal zone. With the 100-day moving average at $3050 and the crucial price range between the 0.5 ($3190) and 0.618 ($2972) Fibonacci levels, a substantial demand is anticipated in this range, which may prevent further downward pressure from market sellers. Additionally, a minor bullish divergence between the price and the RSI indicator hints at a possible bullish resurgence, aiming to reclaim the $3.5K threshold. However, a breach below this critical support zone could trigger a cascade effect towards the 200-day moving average at $2.5K.
Examining the 4-hour chart, a descending wedge pattern is noticeable during a multi-month consolidation correction phase. With the price reaching the lower edge of the wedge and the support region around $3K, a consolidation phase with minimal volatility is observed. This price action indicates a battle between buyers and sellers. Nevertheless, a visible divergence between the price and the RSI indicator on the 4-hour timeframe suggests the strength of buyers, potentially leading to a bullish upswing in the medium term. In such a scenario, the next price target would likely be the critical resistance level at $3.5K. Conversely, a break below the support could drive the price lower towards $2.7K.
As Ethereum’s price shows signs of recovery, it is essential to evaluate whether this resurgence is driven by spot buying or leveraged futures activity. One key metric for this assessment is the funding rates, where positive values indicate bullish sentiment, while negative values signify fear in the market. Notably, during Ethereum’s recent downtrend, the funding rate metric has followed a similar trajectory, steadily decreasing until reaching near-zero levels. This alignment indicates that the recent price decline has resulted in the liquidation of a substantial number of positions in the perpetual market, thereby cooling down the futures market. Consequently, the market seems poised for the resurgence of long positions, signaling the potential for a fresh upward surge.
Ethereum’s recent performance suggests the presence of a strong support zone, technical indicators pointing towards a potential bullish rebound, and a futures market analysis hinting at a possible upward move. However, the market remains volatile, and unexpected breaches of support levels could lead to further downside. Traders and investors should closely monitor the key levels and indicators to make informed decisions in this dynamic market environment.
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