Ethereum’s price has been facing a significant decline recently, particularly after being rejected for the second time at the $4,000 resistance level. This rejection has led to a series of lower highs and lows on the daily chart, indicating a bearish trend in the market. Additionally, the price has broken below the critical 200-day moving average, currently hovering around the $3,100 mark. Despite attempting to retest this moving average, the price seems to be facing strong resistance, hinting at a further downward movement. At this point, there is a high likelihood that Ethereum will drop towards the $2,700 support level in the short term.
Zooming in on the Short-Term Price Action
A closer look at the 4-hour chart reveals a more detailed view of the recent price movement. The downtrend has intensified recently, with the market briefly dipping below the $3,000 support level. However, following an oversold signal from the RSI indicator, the price managed to bounce back above this support zone. Despite this temporary recovery, the lack of momentum in the market suggests that Ethereum may be poised for a deeper decline towards the $2,700 area.
Potential Signs of Capitulation
Amidst the ongoing downtrend in Ethereum, many analysts are on the lookout for signs of capitulation, which could signal a potential bottom for the cryptocurrency. One key metric that analysts are monitoring is the Ethereum Exchange Reserve, which tracks the amount of ETH held in exchange wallets. An increase in this metric indicates potential selling pressure, while a decrease suggests a reduction in supply. Following the recent price drop below $3,000, the exchange reserve metric has surpassed its 30-day moving average, signaling a potential increase in selling activity. This uptick in the exchange reserve could mark the beginning of the capitulation phase, as investors with stop-loss orders below $3,000 may start liquidating their positions.
Ethereum’s price decline and the potential signs of capitulation indicate a challenging period for the cryptocurrency in the near term. Traders and investors should remain cautious and monitor the market closely for any further developments that could impact the price movement of Ethereum.
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