After breaching the middle boundary of the descending price channel, Ethereum has encountered a pause in its bullish momentum, hovering near the crucial $2.8K resistance level. The upcoming price action at this key level will heavily influence Ethereum’s trajectory in the mid-term, with outcomes contingent on the ability of buyers to overcome selling pressure.
Analyzing the daily chart of Ethereum, we observe a consolidation phase following a pullback towards the middle threshold of the descending price channel. The price has retraced towards the significant resistance at $2.8K, a level marked by Ethereum’s previous major swing high. This resistance zone is expected to present a formidable barrier, with substantial supply awaiting, making it a pivotal battleground for market participants. A successful breakout above this level could signify the continuation of the uptrend and a shift towards bullish sentiment, while failure to breach it may result in a reversal or consolidation towards the $2.5K support.
On the 4-hour chart, Ethereum’s bullish momentum has tapered off in the 0.5 ($2.6K) to 0.618 ($2.8K) Fibonacci retracement zone, forming a bearish three-drive pattern. This pattern indicates the growing strength of sellers in this price range, historically a strong resistance area. If sellers maintain control, a bearish retracement towards the lower boundary of the ascending flag pattern around $2.4K could ensue. Conversely, a breakthrough above the $2.8K resistance could propel Ethereum towards the next significant target at $3K, signaling a potential breakout and continuation of the bullish trend.
Incorporating key metrics from the perpetual markets can offer valuable insights into potential future price movements. The Taker Buy/Sell Ratio, which gauges the ratio of market buy orders to market sell orders across the futures market, serves as an important metric in anticipating sentiment shifts and market direction. Despite the Taker Buy/Sell Ratio for Ethereum remaining consistently below 1 over the past few months, indicating increased selling pressure, a recent rebound alongside a price surge from the $2.1K support zone suggests a possible shift in market sentiment. As the ratio nears the critical threshold of 1, the selling pressure in the futures market may be diminishing. If the upward trend in the Taker Buy/Sell Ratio persists, it could indicate a reduction in aggressive selling, paving the way for a potential market rally.
