An inverse head and shoulders pattern has emerged in the 2-week timeframe for Ethereum [ETH], indicating a bullish trend for higher time frames. A breakout from this pattern could potentially propel the Ethereum price to reach $12,000.
On the contrary, a bearish sentiment dominates the daily and lower timeframes, as the price has breached the short-term range, dropping below the crucial $3.4k support level. This downward momentum suggests further declines may be on the horizon.
Presence of Bearish Signals and Support Breakdown
The breach below $3,509 on December 19th marked a shift towards a bearish market sentiment on the daily charts, coinciding with the Relative Strength Index (RSI) dipping below the neutral 50 mark. Meanwhile, the On-Balance Volume (OBV) has exhibited a sideways movement over the past couple of months.
These observations indicate a likelihood of impending losses, with the previous $3.4k support turning into a resistance level. Moreover, the OBV did not exhibit substantial gains in the latter part of November.
Between November 14th and December 19th, the OBV formed a range while Ethereum’s price struggled against the $4k resistance after moving from $3k, encountering rejection and retracing back to $3.3k. This pattern illustrates a bearish trajectory with a lack of buying pressure.
Crucial Levels Highlighted on the 4-Hour Chart for Ethereum Price Movement
On the 4-hour chart, the $3,555 and $3,101 levels are identified as immediate support and resistance thresholds that Ethereum traders should monitor closely to gauge the next potential price direction.
Notably, the $3,314 level on lower timeframes has served as a support base and could potentially trigger a modest 3.4%-5.8% price rebound. Nevertheless, this alone may not suffice to shift the daily timeframe bias towards the bullish end. A renewed surge in buying pressure, conspicuously absent in recent weeks, is imperative to revive bullish sentiments.
Disclaimer: The views expressed in this analysis are personal opinions and should not be construed as financial, investment, or trading advice.