Outside Source
Ethereum’s price has been trending lower over the past few months but has found support at a critical level.
Meanwhile, the market is yet to demonstrate a bullish shift.
Technical Analysis
The Daily Chart
On the daily timeframe, the asset has recently been rejected from the $2,700 resistance level and has gradually declined toward the $2,200 support zone.
While this area has held the price again, the market has yet to display a significant rebound. With the RSI also remaining below 50%, the momentum still favors a bearish continuation. Therefore, a breakout below the $2,200 level remains probable.
The 4-Hour Chart
Looking at the 4-hour chart, it is evident that the market has been on a gradual rise, making higher highs and lows since bouncing from the $2,200 support level.
Yet, the bullish momentum is still lacking, and the market should at least break above the $2,700 level before a long-term bullish reversal could be expected. As a result, whether the recent consolidation is an accumulation or a distribution phase remains to be seen.
Sentiment Analysis
Ethereum Exchange Reserve
While Ethereum’s price has already corrected significantly, market participants remain unconvinced that a bullish reversal will occur soon. Yet, analyzing the supply and demand dynamics of the market can yield beneficial results.
This chart presents the exchange reserve metric (alongside its 30-day moving average), which measures the amount of ETH held in exchange wallets. These coins are considered as supply, as they can be sold quickly and create selling pressure.
As the chart suggests, the Ethereum exchange reserve metric has declined consistently over the past few months. However, it is currently rising above its 30-day moving average, which indicates a potential rise in selling pressure and could lead to a further drop in the short term if not met with sufficient demand.
This article first appeared at CryptoPotato
