ETH Plummets 5% Daily, Will $1.8K Hold or is a Deeper Correction Inbound? (Ethereum Price Analysis)

After the consolidation and correction phase, Ethereum price recently reached the critical support level of the 50-day moving average. However, it is currently going through a narrow price range between the 50-day moving average and the important resistance level at $2k.

Technical Analysis

by Cheyenne

daily chart

Analyzing the daily chart, the price previously formed a higher-top pattern before experiencing a significant decline. The 50-day EMA has acted as support at $1.8K, which is causing significant volatility on the lower timeframes and large shadows on the daily chart.

Currently, ETH is confined within a narrow dynamic range between the 50-day moving average, which is currently at $1,847, and the important resistance area at $2k.

If the price can clear the resistance at $2K and the previous swing at $2.1K, it is likely to trigger an extended rally. Conversely, if it drops below the 50-day moving average, the 100-day moving average at $1.7k will become the primary support level.

4 hour chart

When analyzing the 4-hour chart, the price was rejected by the upper border of the ascending channel, which triggered a bearish trend towards the middle line of the channel. Despite experiencing huge fluctuations after reaching the trend line, the buying pressure in this critical area is still evident.

If the price drops below this key level, the next stop for Ethereum will be at $1.7K. However, if ETH finds support in this area, the bulls may try another attempt towards the $2.1k mark.

On-chain analysis

by: Idris

The price of ETH has been declining recently, following the bullish trend over the recent months. Looking at gauges of futures market sentiment, a long streak of liquidation appears to be the culprit.

This graph displays open interest in Ethereum, which measures the number of open futures contracts. Open interest usually increases when market sentiment is bullish and higher values ​​lead to more volatility in the short term.

Looking at the most recent price action and open interest chart, this metric has clearly been increasing towards the end of the recent rally but has also decreased significantly as the price has fallen. This sudden price drop is likely due to the liquidation of long positions and increased selling pressure, which exacerbates the decline.

This event is called a liquidation chain and usually occurs when open interest is rising rapidly. However, this metric is now showing lower values ​​as a result of massive liquidations, and less volatility can be expected in the short term.