Ethereum’s price has been oscillating in a very tight range over the past couple of weeks as the markets were heading into the new year’s holidays. However, a decisive move may be on the horizon, as the cryptocurrency now resides in a critical area.
Technical Analysis
By: Edris
The Daily Chart:
On the daily chart, the price has been testing a significant resistance level recently, where the $1250 zone and the 50-day moving average have a confluence.
While the market is yet to break this fundamental level to the upside, a potential bullish breakout would pave the way for a rise toward the 200-day moving average, around a psychologically significant price the $1400. A valid breakout from the mentioned 200-day MA would likely lead to a short-term rally which can drive ETH’s price toward $1800.
On the other hand, if the price gets rejected to the downside from the $1250 level and the 50-day moving average, a rapid decline toward the bulls’ last resort, which is the $1000 support level, would be more likely.
The 4-Hour Chart:
Looking at the 4-hour timeframe, the recent consolidation pattern has become more evident, as the price has bounced inside a symmetrical triangle forming below the $1250 mark. A valid breakout from either side of the pattern could lead to a further continuation in the direction of the initial breakout.
The $1350 resistance zone would be the likely target for a bullish breakout, while a break below the pattern could potentially lead to a drop toward the $1100 support level.
The RSI indicator can also provide helpful insight, as the momentum is approaching the overbought area, and a potential bearish divergence could form soon, signaling a high probability for a bearish reversal. All in all, the market’s short-term future is still hanging in the balance, yet a breakout or rejection from the $1250 level could shape the short-term to mid-term price trend, as liquidity will soon return to the markets after the holidays.
Sentiment Analysis
By: Edris
Ethereum Taker Buy Sell Ratio
Ethereum’s price is still reluctant to decline further and create a new lower low, and the futures market sentiment is highlighting one of the reasons for this relative strength.
This chart displays the 100-day moving average of the Taker Buy Sell Ratio, a metric predominantly used for assessing the futures market sentiment, as it indicates whether the bulls or bears are engaging more aggressively with their orders. Values above 1 show bullish sentiment, and conversely, values below 1 indicate the bears’ dominance. Moves above or below this threshold are also significant, as the metrics’ decline below 1 usually signals a crash in the short term.
This metric has been holding above 1 over the last few months, pointing to the bulls’ resilience in the futures market, as their orders create sufficient demand to prevent the price from dropping below the $1000 mark. If this behavior continues, even higher prices could be expected in the short term, as the price is seemingly forming a base however, if the metric drops below 1, a further continuation of the bear market would be highly probable.
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