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Ethereum is approaching its all-time high aggressively, with the price on an almost vertical rise. Yet, based on both technical and sentiment analysis, a correction in the short term is looking probable.
Technical Analysis
By TradingRage
The Daily Chart
On the daily chart, the price has been blowing past several resistance levels since rebounding from the $2,200 level at the beginning of February. The market is currently testing the $3,500 resistance level and is yet to break to the upside definitively.
Meanwhile, the Relative Strength Index demonstrates a clear overbought signal pointing to a potential consolidation or pullback in the coming days. In this case, the $3,000 level can provide sufficient support to prevent a deeper drop.
The 4-Hour Chart
Looking at the 4-hour timeframe, the price has recently demonstrated signs of weakness, failing to break above the $3,500 level.
The Relative Strength Index also demonstrates a bearish divergence between the two recent highs. As a result, another rejection from the $3,500 level might occur, leading to a correction toward the $3,000 zone.
Sentiment Analysis
By TradingRage
Ethereum Open Interest
Ethereum’s price has been rallying rapidly over the last few weeks, approaching the $4,000 mark. This has led many speculators to jump on the crypto wagon once more and chase substantial profits.
This chart represents the open interest, which is a useful metric for futures market sentiment evaluation. It measures the number of open perpetual futures contracts across all crypto exchanges.
The open interest has also been experiencing a steep rise during the recent bullish run. While we have already concluded that there is a logical reason for this trend, high open interest values tend to result in increased volatility.
This article first appeared at CryptoPotato
