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Possible Short-Term Correction for ETH Following Test of $2.1K? (Ethereum Price Analysis)

Possible Short-Term Correction for ETH Following Test of $2.1K? (Ethereum Price Analysis)

Ethereum’s price has been showing bullish signals and has been increasing steadily in recent weeks. Although there are indications that the bear market is over, some concerning signs have emerged in the short term.

Technical Analysis

By: Edris

The Daily Chart

Observing the daily timeframe, the price has been rallying strongly after breaking the large symmetrical triangle to the upside. Currently, ETH is quickly approaching the $2200 resistance level, but the RSI indicator is exhibiting a clear overbought signal, rising above the 70% mark.

This signal might lead to a decline or consolidation in the short term, either before testing the $2200 level, or after. In this scenario, $1800 and the 50-day moving average, trending nearby, could be viewed as reliable support levels to hold the market.

Source: TradingView

The 4-Hour Chart

On the 4-hour chart, the bullish trend is evident as higher highs and lows, as well as a rising trendline are considered positive indicators. However, the market has been facing challenges to rise higher lately, as the RSI has also indicated an overbought signal on this timeframe and dropped below the area, indicating that the momentum is waning and a potential pullback could be expected.

Therefore, the $1950 support level and the bullish trendline should be monitored as possible support areas. Nevertheless, the market might continue to rise before correcting and eventually reaching the $2200 resistance region. So, while the RSI’s pattern is concerning, the market continues to be in an uptrend on this timeframe from a classical price action perspective.

Source: TradingView

Sentiment Analysis

By: Edris

Ethereum Open Interest

During the past few months, Ethereum’s price has been rising, attracting investors and traders. Although usually considered a positive sign, too much speculation can become problematic, as it has occurred in the past.

The chart below displays Ethereum’s open interest, which measures the occurrence of open perpetual futures contracts. Usually, higher values indicate a bullish sentiment, while lower values suggest fear controlling the market.

After the recent ETH price surge, open interest has skyrocketed considerably, pointing to a substantial increase in speculation.

These spikes are usually accompanied by significant volatility and sudden price corrections. Therefore, investors should exercise caution as a pullback or even a bearish reversal could be expected in the short term due to a potential long liquidation cascade.

Source: CryptoQuant