Ethereum price has been trending up for quite some time now after breaking above the $1300 resistance level. While the positive trend remains on higher timeframes, some signs suggest that at least a short-term correction is quite likely.
Technical analysis
Through: Edris
The daily chart
On the daily timeframe, the price is constantly climbing and may soon reach the $1800 level. However, a short-term pullback seems imminent as the RSI indicator has been in overbought conditions for the past few days.
In the event of a correction, the 200-day moving average located around the $1400 mark could be the first turning point, with the 50-day moving average located around the $1300 support zone being the second major support. Still, the price might first test the $1800 level before a pullback or reversal.
In the less likely event of an upside break of the $1800 resistance level on the first try, ETH could rally aggressively to the significant $2000 level.
All in all, this scenario seems unlikely in the near term, as a pullback seems much more possible.
The 4 hour chart
Looking at the 4-hour timeframe, price has reached the $1650 resistance zone but is struggling to break higher at the moment.
The RSI indicator is also showing worrying signs during this period as a clear bearish divergence has formed between the last two price highs with the RSI showing a lower high. This classic reversal pattern could indicate a likely rejection of the $1800 level in the near term.
From a classic price action perspective, the $1350 support zone may continue to hold in the event of a deep correction. A valid break above the $1800 level would invalidate this scenario, but it does not seem very likely at the moment.
Sentiment analysis
ETH Open Interest
Ethereum price has been rising for the past two weeks after a grueling consolidation above the $1,000 mark. Meanwhile, the decline in the foreign exchange reserve metric has stalled after a massive drop since the FTX bankruptcy.
It is likely that the recent rally was the result of the significant decrease in the foreign exchange reserve, as many investors pulled their coins from exchanges and stored them in their personal wallets, fearing that the same thing that happened to FTX could arrive at their favorite exchange. . Therefore, the resulting supply shock could be one of the main factors leading to the current price rise.
However, the exchange reserve metric has currently stopped falling, indicating that while many holders are withdrawing ETH, others are depositing their coins to sell them with less profit or loss as the price has risen. relatively higher.
To conclude, this metric should be watched closely in the near term as an increase in the reserve could lead to an increase in selling pressure, leading to a bearish reversal.
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