Ethereum (ETH) Fails to Break Free from Descending Channel Despite Bounce Toward $3,500
Key Takeaways
- Ethereum price attempted to climb above $3,500 over the weekend but failed.
- The cryptocurrency trades within a falling channel amid bearish momentum.
- ETH price risk falling below $3,000 as a key indicator flashed a sell signal.
Since mid-December, Ethereum (ETH) price has failed to hit $4,000. Over the weekend, the cryptocurrency appeared ready to move toward the zone again.
But like other times since the New Year began, it failed to notch the $3,500 not to talk of the $4,000 mark. This is because ETH has continued to wobble within a tight-trading range.
Ethereum Remains Range-Bound
On the daily chart, Ethereum’s price remains confined within a descending channel.
A descending channel is a bearish pattern formed by two falling trendlines. The upper trendline represents resistance, while the lower trendline represents support.
When the price moves between these lines, it indicates that the downtrend might continue. According to the image below, the major resistance lies around $3,474. This region was one of the reasons ETH failed to hit $3,500 over the weekend.
Furthermore, the support line of the pattern sits around $3,142, which has prevented a breakdown below $3,000. A look at the Relative Strength Index (RSI) shows that the reading is still below the neutral 50.00 point.
This position indicates that the momentum around Ethereum is bearish. If this remains the case, then ETH’s price is unlikely to climb in the $4,000 direction.
ETH Price Faces Stiff Resistance
Ethereum’s price action on the 4-hour chart also aligns with this sentiment. This is because the Supertrend indicator has flashed red on the chart, and is above Ethereum price.
The Supertrend provides buy and sell signals based on its position relative to the closing price. A buy signal appears when the Supertrend line drops below the closing price and turns green, indicating an upward trend.
On the other hand, a sell signal occurs when the indicator rises above the closing price and turns red, suggesting a potential downward trend. Since it is the latter, it is likely that ETH price might face an correction in the short term.
Looking at the Fibonacci retracement indicator, Ethereum price is on the verge of dropping below the 0.50 ratio at $3,330. If this happens, this could accelerate a downturn toward the 0.236 Fib level at $3,110.
Reaching this level might mean that a double-digit correction could be next. Should that be the case, then ETH’s value could drop to $2,914.
On the flip side, if Ethereum price resists declining bel0w $3,350, this potential collapse might not take place. Instead, the cryptocurrency could climb to $3,746 and potentially hit $4,000.
In a highly bullish scenario, ETH price could also rally toward $4,500 as long as demand increases as this could invalidate the bearish bias.
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