Recently, Ethereum [ETH] saw a significant surge in price, hitting the $3.6k milestone on the back of strong weekly momentum. This upward movement led to a substantial number of ETH addresses entering profit territory. However, in the last 24 hours, there has been a minor pullback. The question now is whether this trend will persist or if Ethereum will reverse course and aim for $3,900 next.
Ethereum Navigates a Correction Phase
Previous reports highlighted ETH’s encounter with resistance at $3.6k. Breaking through this level and turning it into support could pave the way for a push towards $3.9k. Despite these bullish expectations, at the current moment, ETH is trading at $3,577.87.
Data from IntoTheBlock shows that over 90% of ETH investors are currently in profit. Such a high percentage of profitable investors often triggers profit-taking activities, leading to increased selling pressure.
Recent data from Santiment indicates a rise in ETH supply on exchanges, suggesting that investors are offloading their holdings. However, large investors, known as whales, continue to exhibit confidence in Ethereum, with an increase in the supply held by top addresses.
Is Ethereum’s Downtrend Likely to Persist?
A spike in Ethereum’s open interest coincided with its sharp price increase last week. This uptick may suggest that the current correction could be brief, with ETH potentially retesting its recent resistance levels.
Furthermore, the high funding rate implies a dominance of long positions, reflecting a bullish sentiment among traders who are willing to pay a premium to maintain their long positions.
These factors collectively point toward a potential breakthrough above the $3.6k resistance, triggering increased volatility that could propel Ethereum towards the $3.9k mark in the near future. Technical analysis also supports this view, with indicators like the MA Cross signaling a bullish market stance, as the 9-day MA remains comfortably above the 21-day MA.
Additionally, during ETH’s resistance testing phase, the On Balance Volume (OBV) has remained elevated, indicating strong trading volume on days with positive price movements compared to those with negative price actions—a bullish trend signal.
Considering the confluence of these indicators, Ethereum appears poised for a successful breach of the $3.6k level, potentially opening the path towards $3.9k. However, failure to surpass this hurdle could result in a retracement towards the $3.3k support level.