Ethereum’s price has been on a downward trend recently, with the cryptocurrency facing a second rejection at the $4,000 resistance level. The daily chart shows a series of lower highs and lows since failing to break above $4,000. Additionally, the market has broken below the 200-day moving average, currently around $3,100. The price is now retesting the 200-day moving average but seems to be facing rejection towards the downside. This suggests that Ethereum is likely to drop towards the $2,700 support level in the short term.
Short-Term Outlook
Looking at the 4-hour chart provides a more detailed view of the recent price action. The downtrend has intensified, briefly breaking below the $3,000 support level. Despite an oversold signal from the RSI, the price managed to climb back above the support zone. However, the lack of momentum indicates a potential further decline towards the $2,700 area.
Capitulation Phase
Analysts have been closely monitoring Ethereum for signs of capitulation, signaling a potential bottom. One metric being monitored is the Ethereum Exchange Reserve, which measures the amount of ETH held in exchange wallets. An increase in this metric suggests selling pressure, while a decrease signals a decrease in supply. Following the recent drop below $3,000, the exchange reserve metric has risen above its 30-day moving average. This uptick may indicate the beginning of the capitulation phase, as stop losses for many investors were likely set below the $3,000 level.
Ethereum’s recent price drop has raised concerns among investors and analysts. The rejection at the $4,000 level, coupled with the breach of the 200-day moving average, suggest that the cryptocurrency may be facing further downside in the short term. The lack of momentum to break higher on the 4-hour chart adds to the bearish sentiment. Additionally, the rise in the Ethereum Exchange Reserve metric may signal capitulation among investors. It will be crucial to monitor these indicators closely to gauge the future direction of Ethereum’s price movement.
