January 26, 2023

The price of Ethereum has fallen below a significant resistance zone where the 100-day and 50-day moving averages and a recently formed mid-channel boundary had a stronger confluence. Therefore, a possible uptrend is only possible if the price crosses this range. Conversely, a rejection can trigger another bearish leg.

Technical analysis

By Shayan

The Day Card

The price of Ethereum has been moving in a descending price channel for six months. Most recently, the price failed to surpass the 100-day and 50-day moving averages of $1300. As a result, Ethereum dipped below the midpoint of the channel and is currently trying to retest.

The reconciliation of the 50-day and 100-day moving averages and the $1300 static resistance level make this level decisive for the cryptocurrency. If the price breaks above the resistance zone mentioned above, the upper trendline of the channel around $1500 would be the main barrier to the price. However, based on current market sentiment, a drop to $1000 would be the most likely scenario in the near term.

eth_price_chart_231201
Source: TradingView

The 4-hour chart

In the 4-hour time frame, the price had an impulsive bearish rally and is consolidating in the form of a well-known continuation correction pattern called a rising flag. On the other hand, the 0.5-0.618 area of ​​the Fibonacci retracement, which stands at $1251-$1275, coincides with the static resistance level at $1260.

Given the importance of this resistance level and the bearish continuation flag pattern, the potential to be rejected from the $1251-$1275 region, marking another bearish impulsive move towards the $1000 level, is high. Nevertheless, if the price crosses the above-mentioned level, the bulls could push the price higher.

eth_price_chart_231202
Source: TradingView

Onchain Analysis

By Shayan

The following chart shows the Exchange Reserves metric next to the price of Ethereum. The measure has been in a downward trend since July 2020. However, after the massive price crash in November, the measure of foreign exchange reserves fell significantly and fell to a new low.

eth_exchange_reserves_chart_231203
Source: CryptoQuant

This indicates that the market participants are offloading their assets from exchanges after the collapse of the FTX. This results in a substantial market capitulation phase that could eventually usher in the final phase of the recent bear market.

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Cryptocurrency Charts by TradingView.

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