Ethereum has been facing selling pressure after briefly consolidating near the $4K resistance level. This has led to a decline in price, with a significant support zone including the 100-day moving average at $3,430 and the 0.5 Fibonacci retracement level at $3,419 acting as potential areas for buyers to step in. This suggests that the current bearish retracement may continue in the short term, with these support levels playing a crucial role in determining the price action.
On the 4-hour chart, a head and shoulders pattern has formed, indicating a lack of bullish momentum and an increase in supply. The price recently broke below the neckline of this pattern, increasing the likelihood of a bearish scenario playing out. Furthermore, a bearish divergence between the RSI indicator and the price further emphasizes seller dominance, raising concerns about Ethereum’s future trajectory. The price is currently at a critical support level of around $3.6K, and if sellers manage to breach this level, the bearish trend is likely to continue.
Traders may be interested in the behavior of futures market participants amidst Ethereum’s struggle to surpass the $4K mark. The chart showing the 7-day moving average of the Taker Buy Sell Ratio, which assesses the relative aggressiveness of buyers versus sellers, indicates a trend of aggressive selling in recent days. With the ratio failing to rise above one and declining sharply, it suggests that the majority of futures traders have been selling Ethereum aggressively, either for speculative purposes or to realize profits. This significant drop in the metric is a bearish signal, indicating that the current downward retracement could persist if the trend continues.
In conclusion, Ethereum is facing selling pressure after failing to break above the $4K resistance level, leading to a decline in price. The presence of a significant support zone, including the 100-day moving average and the 0.5 Fibonacci retracement level, provides potential areas for buyers to step in and potentially reverse the bearish retracement. However, patterns on the 4-hour chart, such as the head and shoulders formation and the bearish divergence between the RSI indicator and price, suggest a continuation of the bearish trend in the short term. Traders should closely monitor the behavior of futures market participants, as aggressive selling activity could lead to further downward pressure on Ethereum’s price.
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