Ethereum has recently experienced a sharp downturn, but it has found crucial support in a specific zone. This zone is made up of the 100-day moving average at $3050 and the price range between the 0.5 and 0.618 Fibonacci levels ($3190 and $2972). This zone is pivotal as it attracts significant demand, potentially preventing further downward pressure from sellers. Additionally, there is a minor bullish divergence between the price and the RSI indicator, indicating a potential bullish resurgence aiming to reclaim the $3.5K mark. However, a breach below this critical support zone could lead to a cascade effect towards the 200-day moving average at $2.5K.
A closer look at the 4-hour chart reveals a descending wedge pattern forming during a multi-month consolidation correction period. After a substantial decline, the price has reached the lower boundary of the wedge and the support region around $3K. Despite this, minimal volatility is observed as the price enters a consolidation phase, displaying a battle between buyers and sellers. A divergence between the price and the RSI on the 4-hour timeframe indicates the strength of buyers, increasing the likelihood of a bullish upswing in the medium term with the next target being the critical resistance level at $3.5K.
To understand the current resurgence in Ethereum’s price, it is essential to analyze whether it is driven by spot buying or leveraged futures activity. The funding rates serve as a key metric for this analysis, with positive values indicating bullish sentiment and negative values signaling fear in the market. With Ethereum’s recent price downtrend, the funding rate has mirrored this trajectory, steadily decreasing until reaching near-zero levels. This alignment implies that the recent price drop led to the liquidation of a significant number of positions in the perpetual market, resulting in a cooling effect on the futures market. Consequently, the market is poised for the resurgence of long positions, potentially leading to a fresh upward surge in Ethereum’s price.
Ethereum is currently supported by critical levels and technical indicators that suggest a possible bullish rebound in the medium term. The market sentiment, as reflected by funding rates, also indicates a potential shift towards a more positive outlook. However, it is crucial to monitor the price action and key support levels closely to anticipate any unexpected movements.