Ethereum's bullish momentum has significantly weakened after breaching the midline of a multi-month descending channel. This has led to sideways price consolidation.
The Daily Chart
Ethereum experienced a surge driven by increased buying activity in the perpetual and spot markets, breaking above the crucial $2.5K resistance level. This breakout signals buyers’ intent to push ETH toward its yearly high of $4K despite the prevailing bearish sentiment over the past few months. Currently, Ethereum’s price is consolidating in a sideways pattern, hinting at a potential pullback toward the recently broken trendline. If the price retraces to the $2.5K level and finds strong support, the pullback will likely conclude, positioning Ethereum for a renewed push toward the channel’s upper boundary, around the $3K mark.
The 4-Hour Chart
On the 4-hour chart, Ethereum’s upward momentum stalled upon reaching the significant resistance zone near the 0.5 Fibonacci retracement level ($2.6K). This area presents a supply zone that has consistently acted as a barrier for buyers aiming for the $3K resistance level. Although ETH may face a period of sideways consolidation or corrective retracements in the short term, a resurgence of bullish momentum could lead to a breakout above this resistance zone.
Onchain Analysis
The perpetual futures market plays a significant role in driving overall price movements, making it essential to assess the sentiment of futures traders for clues about potential trends. This analysis focuses on Ethereum’s 30-day moving average of funding rates, a key metric that provides insight into whether buyers or sellers are more aggressive in executing market orders within the futures market. The 30-day moving average of ETH funding rates has recently shown a slight bullish shift after a prolonged decline. This shift has coincided with a broader market rebound and an uptick in ETH’s price, suggesting a possible change in overall sentiment. The rise in funding rates indicates increased buying activity among futures traders.
For Ethereum to continue its recovery and target higher price levels, the demand in the perpetual futures market must keep rising. However, this bullish sentiment will need consistent follow-through from buyers to maintain momentum, as any significant reversal in funding rates could stall Ethereum’s price growth.
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