During the recent correction in altcoins, Ethereum [ETH] experienced a drop of more than 20% following its rejection at the $4,000 resistance mark.
Nonetheless, the current downward trend may not be definitive, with Ethereum’s technical patterns and on-chain indicators giving mixed signals regarding a potential price recovery or further market volatility.
Critical Support Zone at $2.8k Approaching for ETH
Analysis of Ethereum’s price movements on a weekly basis reveals a consolidation phase within a bullish flag pattern, a formation often observed prior to a breakout. The recent decline has brought ETH in proximity to the lower boundary of this upward flag at $2,800.
If this support level holds steady, it could serve as a launchpad for a substantial upward surge. A successful bounce from this point might propel Ethereum towards its next significant target of $6,000.
Conversely, failure to sustain this support could expose ETH to further downside potential.
Indications of a Potential Reversal near $3,000
Upon zooming in on the daily chart, Ethereum’s price action suggests a potential bullish reversal in the short term.
The $3,000 level is of particular importance, with trading volume for ETH showing a slight uptick over the past 24 hours.
Data from CryptoQuant aligns with this analysis, showcasing a notable surge in the number of active addresses within the same timeframe. Increased network engagement often signals a renewed interest in the asset, which could stabilize prices or trigger an upward movement.
Outflows from Exchanges Suggest Profit-Taking Behavior
While short-term indicators lean towards bullish sentiment, the on-chain metrics paint a slightly different picture for the long haul.
Reports from CryptoQuant highlight a significant spike in Ethereum’s exchange outflows over the past day, indicating a rise in selling pressure as traders secure profits around the $3,000 mark.
Traditionally, these movements in outflows oscillate between peaks and troughs, and the current upsurge may imply an accumulation of selling activity on the market.
ETH Investors Continue to Enjoy Profits Despite…
Despite recent corrections, the majority of individuals holding ETH are currently in a profitable position. Data sourced from IntoTheBlock suggests that 76% of all ETH holders are making gains at the prevailing price levels. This underscores the confidence prevalent among long-term investors and hints at a robust foundation for Ethereum’s potential sustained rally.
The future trajectory of Ethereum’s price, whether in the short or long term, is contingent on several key levels. The $2.8K support level within the flag pattern could set the stage for a notable rally if maintained, while the heightened network activity surrounding the $3K psychological threshold bolsters an optimistic outlook.
Given the majority of holders’ profitability, the long-term outlook for ETH remains positive.