The Daily Chart
Ethereum has been showing significant bullish signals, as the price has been in a robust uptrend, breaking above the key resistance level of $2.1K. Despite a temporary pullback, the cryptocurrency maintained its upward trajectory, reaching a yearly high of $2.4K. This PA suggests a resurgent bullish market, reflecting renewed demand and increased buying interest among market participants.
It’s important to note that short-term corrections typically follow each bullish surge. As can be seen on the chart, Ethereum’s upward momentum was rejected when it hit the upper boundary of the wedge, resulting in a 10% decline.
The divergence between the price and the RSI indicator also supports the likelihood of a short retracement before the next bullish move begins. In such a scenario, the $2,000 support zone is expected to be Ethereum’s next target on the daily timeframe.
The 4 hour chart
A closer look at the 4-hour chart shows that Ethereum’s robust upward movement lost momentum when it encountered a key resistance zone that includes the $2.4K price range and the upper threshold of the ascending wedge pattern. On the other hand, the extended bearish divergence between the price and the RSI played a crucial role in triggering a significant rejection.
However, Ethereum has already reached a critical support area that includes the price range between the 0.5 ($2,211) and 0.618 ($2,166) Fibonacci levels and the $2,000 static support level. A break below these critical support levels could signal a significant downturn in the market.
Despite the prevailing bullish sentiment and the apparent control of the buyers in the current market dynamics, there is a significant likelihood of a temporary consolidation correction phase in the short term, accompanied by increased volatility.
The price of Ethereum has recently surged and reclaimed the $2,1K price range, raising expectations among market participants of the beginning of a new long-term bull market. Accordingly, examining the sentiment in the futures market can provide valuable insight into Ethereum’s overall outlook.
This chart illustrates Ethereum’s open interest, a measure of the number of open perpetual futures contracts on a daily basis. Typically, higher readings indicate increased volatility and potential bearish reversals, while lower readings suggest a more sustainable trend. As the chart clearly shows, a gradual rise in the Open Interest metric often accompanies bullish market phases. However, if the metric reaches elevated levels, it could signal a potential major market reversal.
Open interest has been on an upward trajectory, but has yet to reach the levels seen during the all-time highs. Therefore, while corrections are always possible, the futures market is far from overheating. The current bullish trend, supported by moderate open interest levels, is likely to continue in the coming weeks. Monitoring this metric will be essential to gauge the potential.
