Ethereum’s price finds itself caught in a tight range between the crucial 50-day moving average (MA) support level and the significant $2K resistance level, after a period of consolidation and correction. This struggle between crucial price indicators leaves market participants questioning the future of Ethereum in the short term.
On the daily chart, Ethereum formed a higher-high pattern before encountering a considerable decline. The 50-day MA acted as a firm support level at around $1.8K, creating substantial volatility in lower timeframes and leaving a pronounced shadow on the daily chart. ETH now faces a narrow dynamic range between the 50-day MA, currently at $1847, and the considerable resistance of $2K. Should the price surpass this resistance and its prior swing at $2.1K, we may see an extended rally. However, if it falls below the 50-day MA, the 100-day MA at $1.7K will become the primary support level.
The 4-hour chart shows that Ethereum’s price was previously rejected by the ascending channel’s upper limit, resulting in a downward trajectory towards the channel’s mid-trendline. While considerable volatility was seen after reaching the trendline, strong buying pressure in this critical region is still apparent. If the price plummets below this crucial level, Ethereum could fall to $1.7K. Conversely, if support is found, bulls might attempt another run towards the $2.1K threshold.
On-chain analysis for ETH reveals a significant decrease in the futures market sentiment metrics, with the most likely explanation being a long liquidation cascade preceding the asset’s recent price plunge. Ethereum’s Open Interest, which measures the number of open futures contracts, usually indicates bullish market sentiment and higher values lead to increased short-term volatility. As the price declines, this metric has dropped substantially, likely due to long positions being liquidated and increasing selling pressure.
Liquidation cascades typically occur when open interest rises rapidly, exacerbating price decline. Nevertheless, lower values are now evident as a result of substantial liquidations, suggesting that lower volatility may be expected in the short term per the Open Interest chart.
In summary, Ethereum’s price struggle between the 50-day MA support and the $2K resistance level epitomizes the debate between market bulls and bears. The pros include potential support from the MAs and the possibility of an uptrend continuation towards $2.1K, while the cons center on the risk of a further decline to $1.7K in case of a break below the 50-day MA level. This apparent conflict showcases the importance of continued monitoring and analysis of Ethereum’s price movements in this uncertain stage.
Source: Cointelegraph
