Ethereum has been experiencing a phase of sideways consolidation after a recent dip towards the critical support level of $3K. The cryptocurrency seems to be stuck within a range of $3K to $3.7K, and it appears that volatility will remain low unless it breaks out in one direction or the other.
A detailed analysis of the daily chart reveals that Ethereum has been consolidating sideways after finding strong support around the $3K mark. This area coincides with important Fibonacci retracement levels between 0.5 ($3190) and 0.618 ($2972), as well as the crucial 100-day moving average at $2972. These support levels sparked a rebound in the price of ETH, pushing it towards the upper end of the range at $3.7K. However, recent price action has encountered resistance near this level, indicating the presence of sellers. Despite this, Ethereum continues to consolidate sideways, with traders expecting a bullish breakout above this key price range.
A closer look at the 4-hour chart shows the formation of a sideways wedge pattern during a period of corrective retracements. Usually, such patterns suggest a potential continuation of the bullish trend once there is a breakout above the upper boundary. Ethereum witnessed strong buying pressure near the $3K support area, leading to a renewed bullish momentum that broke out of the wedge. However, upon reaching the $3.7K resistance level, Ethereum faced rejection and underwent a slight retracement. The price has now returned to the broken wedge level, potentially completing a pullback. If this pullback is successful, Ethereum could see another upward movement towards the $3.7K mark. On the flip side, a bearish retracement towards the $3.2K support level is also a possibility.
As Ethereum’s price shows signs of rebound, it is important to analyze whether this is driven by spot buying pressure or leveraged futures positions. Looking at the exchange reserve metric, which measures the amount of ETH held in exchange wallets, we can see that after a sharp increase above the 30-day moving average a few weeks ago, the metric has now fallen back below the MA. This indicates that investors have been withdrawing ETH from exchanges, suggesting spot buying pressure. Therefore, the demand in the spot market is playing a significant role in a potential rally higher for Ethereum, leading to a more sustainable uptrend.
Ethereum is currently in a phase of consolidation, with traders closely watching for a breakout above the $3.7K resistance level. The spot market demand seems to be driving the recent rebound in price, which could pave the way for a more sustained uptrend in the future. It is essential for investors to monitor the key support and resistance levels, as well as market dynamics, to make informed decisions about their Ethereum holdings.