- Following a period of consolidation near critical support levels, Ethereum witnessed a modest bullish rebound but still faces a notable resistance range.
- Analyzing the 4-hour chart reveals Ethereum’s sideways movement near the lower boundary of the wedge pattern, forming an inverted head and shoulders pattern suggesting a potential bullish reversal.
- There are currently no noteworthy levels of liquidity in Ethereum’s path in either direction in the short term, and the market appears poised for a renewed impulsive movement driven by sentiment in the futures market.
Ethereum has seen an extended period of consolidation near critical support levels defined by the 0.5 and 0.618 Fibonacci retracement levels, as well as the 100-day moving average. This sideways price action has resulted in a modest bullish rebound, however ETH still faces formidable resistance.
Technical Analysis Shows Pivotal Support and Resistance Levels
An examination of the daily chart reveals that Ethereum’s prolonged consolidation phase occurred near the 0.5 ($3,139) and 0.618 ($2,910) Fibonacci retracement levels, along with the important 100-day moving average. This coincided with the lower boundary of a multi-month descending wedge pattern, typically a bullish signal.
However, Ethereum now contends with a major resistance zone encompassing the wedge’s upper boundary and the $3.4K level. Overcoming this could enable a significant bullish surge to the $4.1K threshold. Failure to break resistance may continue the consolidation within the wedge and 100-day MA.
The 4-hour chart shows Ethereum’s range-bound action near $3K, corresponding to the wedge’s lower boundary. An inverted head and shoulders pattern suggested potential reversal, but the breakout above the $3.3K neckline was rejected, indicating a false breakout.
Recent price action suggests continued consolidation between $3.4K resistance and $3K support. A decisive break of this range could initiate a new medium-term trend.
Futures Liquidations May Drive Next Major Price Move
Ethereum’s rejection from the $3.3K swing high may cause traders to watch futures liquidations for clues on market direction. The liquidation heatmap for Binance ETH/USDT shows price levels with significant liquidity capable of impacting price trends.
The sharp drop below $3K liquidated many longs, triggering sell-stop orders. But subsequent corrective bounces cooled the futures market in recent weeks. Currently, there are minimal liquidity levels in either direction short-term. The market appears poised for a new impulsive move driven by futures sentiment.
Barring unexpected developments short-term, and given Ethereum demand, the price may target liquidity above $4K long-term.
