After an abrupt and swift decline from the $1.8K threshold, the price of Ethereum saw a substantial drop, falling below the crucial 100-day and 200-day moving averages (MAs). This caused the price to enter bear market territory.
This new development has emerged as a huge bearish indication for ETH. Nevertheless, the price established support within a significant range, proving that an immediate consolidation phase may be forthcoming.
Analytical Techniques
The Daily Chart
A further examination of the daily chart reveals that the price's breach below the 100-day and 200-day moving averages, around $1,835 and $1,800, respectively, generated a major drop that eventually put Ethereum's value within the important support zone at $1.6K. This was discovered due to the price's breach underneath the moving averages after it fell below them. This became apparent once the price dropped below these moving averages, which led to their discovery.
The 200-day moving average indicates current market movements that carry great relevance. This is because you must be aware of this information. A pessimistic disposition is usual for the market whenever the price exceeds this moving average (MA).
Currently, the support level of $1.6K has shown its strength by preserving the price, which shows there is a possibility for a rebound, which would then be followed by a retreat. On the other hand, the recent downward trend has put the market structure into a more negative position, increasing the chance of a retest of the $1,400 zone in the coming weeks. This was caused by the market structure being previously in a more positive position. This occurred due to a movement in the market structure towards a more negative position, which was the root cause of the problem.
The Four-Hour Timeline
When looking at the timeframe of four hours, it is clear that ETH could not maintain its position above the crucial support mark of $1.8K. As a consequence of this sharp drop, the price located a level of support within the area of $1.5K, which brought about a momentary halt to the ongoing downward trend.
Remarkably, this support level has been effective in keeping the price at its current level, resulting in consolidation along the sideways trend. As a direct result of this consolidation phase, the price movement of Ethereum has taken on the appearance of a generally symmetrical pattern in a triangle shape. Depending on the direction in which the pattern's breakout occurs, this technical pattern can evolve into bullish or bearish indications.
Analyzing the Chain
There is no indication that the price of Ethereum will increase or decrease shortly. Therefore, its trajectory is in a state of uncertainty. Because the price chart only provides limited insights into the future developments of the market, looking into the sentiment of the futures market could provide extremely helpful information regarding Ethereum's current status.
The following chart illustrates Ethereum's financing rates, essential for determining which group, long traders or short sellers, is in the driver's seat. An optimistic outlook is consistent with positive values, whereas a bearish stance is indicated by negative numbers.
An obvious pattern can be seen developing from the data, which is notable. After an abrupt and impulsive drop in price, followed by a phase of consolidation during which there was no price movement, the financing rates started a downward trend, resulting in the chart having lower peaks. This situation, which is currently playing out, provides evidence that investors are losing interest in holding long positions in the futures market, which may pave the way for a bearish trend.
Nevertheless, despite the widespread opinion that a bear market is about to emerge, there is still the potential for a brief phase of correction before a more dramatic downward trend. If the financing rates were to take a bearish posture, this would increase the chance of a chain reaction of short liquidations, potentially leading to a significant bullish bounce that drives the price higher.
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