Ethereum poised to retest $3.5 million as bullish signs reappear (ETH price analysis)

After experiencing a rapid downturn, Ethereum found itself supported by a substantial zone consisting of the 100-day moving average and a key price range between the 0.5 and 0.618 Fibonacci levels. Therefore, a bullish rebound is expected in the medium term.

Written by Shayan

daily chart

A thorough examination of the daily chart reveals a long-term corrective retracement, and eventually we see support for the price within the pivotal zone.

This zone includes the 100-day moving average at $3050 and a key price range between the 0.5 ($3190) and 0.618 ($2972) Fibonacci levels.

This range is important as it attracts significant demand and may prevent further downward pressure from sellers in the market. Moreover, a slight bullish divergence between the price and the RSI indicator suggests a possible bullish resurgence targeting the recovery of the $3.5,000 threshold. However, despite the bullish signs, an unexpected breakout of this key support zone could trigger a cascading effect towards the 200-day moving average at $2.5,000.

4 hour chart

A closer look at the 4-hour chart reveals a descending wedge pattern forming during a multi-month consolidation. After a significant decline, the price reached the lower end of the wedge and the support area around $3,000.

Nevertheless, given the potential buying pressure within this important range, the price has entered a consolidation phase characterized by minimal volatility.

This price movement highlights the tug of war between buyers and sellers. Nevertheless, the notable divergence between the price and the 4-hour RSI indicator suggests buyer strength, increasing the likelihood of a bullish move higher in the medium term. In such a scenario, the price's next target would be the key resistance level of he $3.5,000. Conversely, a break below this support increases the likelihood of a decline towards the $2.7,000 support.

Written by Shayan

As the price of Ethereum shows signs of recovery, it is important to determine whether this recovery is due to spot purchases or leveraged futures trading. A key indicator in this analysis is the funding rate, with positive values ​​indicating bullish sentiment and negative values ​​indicating market fear.

Observing the recent downward trend in the Ethereum price, it is noteworthy that the funding rate indicator reflects this trajectory, steadily declining until reaching near-zero levels. This agreement suggests that recent price declines have led to the liquidation of a significant number of positions in the perpetual market, resulting in a cooling effect on the futures market. As a result, the market appears poised for the re-emergence of long positions, with the potential for a new rally.