
Ethereum (ETH) has been trading in a strong uptrend, displaying resilience above crucial levels as it consolidates following a sharp move from $2,200 to around $4,000. However, warning signs are beginning to emerge on the lower timeframes that could translate into a significant pullback on the higher ones.
The daily chart continues to consolidate below the $4,000 zone after its aggressive rally from the $2,800 breakout level. ETH is holding above the previous resistance-turned-support at $3,400 and the buyers are successfully defending that area thus far. The 100-day moving average has started to curve upward and aligns with the bullish structure and momentum.
Looking ahead, the primary resistance remains at $4,100, which represents the 2024 high. If investors can regain momentum and push above $3,800, a retest and breakout above the $4,100 level may be on the table. On the flip side, losing $3,400 would likely trigger a deeper correction towards $2,800, which coincides with the 100-day moving average.
The four-hour chart reveals that ETH has swept the $3,700 highs and was rejected twice, indicating some exhaustion in the short-term. The asset has now created a lower high and potentially a lower low after weeks of bullish structure, which could mark the beginning of a significant pullback if the $3,700 resistance level holds.
As long as this level is respected, the short-term bias remains neutral to bullish. However, a breakdown below $3,500 may attract sellers and trigger a move towards $3,300 or even lower levels.
In addition, open interest has started to decline after reaching near $28 billion at ETH’s peak around $3,800. This slight decrease in open interest during the consolidation period suggests some long positions have been closed or liquidated. Nonetheless, the broader trend is still undoubtedly upward, with open interest having doubled since May.
While this development may be seen as a healthy reset, it also raises concerns about excessive leverage building up before a potential correction. For now, it’s prudent to consider that there is still room for more upside before the market requires caution.
It is essential to monitor these warning signs closely and prepare for any eventual corrections while maintaining a neutral perspective, considering both bullish and bearish perspectives simultaneously.
Source: cryptopotato.com